Iridium Changes the Game
I have always liked Iridium, at least the new Iridium that followed the bankruptcy of the original, mobile phone-focused Iridium. One of the things that I have liked most about Iridium is the way the operator established an ecosystem in which different companies could use the Iridium network to provide service and support devices that were not Iridium’s idea. It reminds me of how Microsoft owns the platform on which most all computers, software and hardware providers compete. In effect, most of the developers for personal computers are indirectly working for Microsoft. We may not always like the result, but Microsoft is able to harness a large proportion of the computer industry to make their operating system and, to a lesser degree, their applications must have products.
In the case of Iridium, the core product is a global communications network. Iridium is less about a handset than a capability. Just as the Apple app store provides a broad range of applications that help justify the purchase of an iPad or iPhone, Iridium’s network usage is boosted every time a customer buys a device that uses the Iridium network. By working with partner companies, Iridium is able to tap into their specialized knowledge of applications and markets while devoting its own efforts to improving and maintaining a communications network (which is Iridium’s area of expertise).
With the recently announced Iridium Force initiative, the MSS operator has gone even further down this path. With Iridium Force, the company has moved on two levels. First, they are offering new hardware. Iridium users now have two very interesting new devices: a new handset, the Iridium Extreme, and a Wi-Fi hotspot, the AxcessPoint. This device allows smartphones, laptops and other Wi-Fi enabled devices to access the Iridium network when it is attached to the appropriate Iridium handset. They are even offering a free software application that allows laptops to interface directly with comparable Iridium handsets, eliminating the need for the additional hotspot device. Although the AxcessPoint is not yet capable of handling a smartphone’s voice traffic, all other features are enabled including text messaging and Internet access. Iridium doesn’t need to develop a whole suite of consumer access devices because it is giving satellite access to those already in use.
Another new Iridium device is the Iridium Core 9523 voice and data module, which contains all of the satellite network access functions of the Extreme handset, allowing a device manufacturer to easily add full satellite connectivity to any device. Iridium is also incorporating GPS functionality into the Iridium Extreme and the Iridium Core, allowing a whole new suite of products and services that make use of the device’s location data. The first of these is a “panic” button on the Iridium Extreme that will summon help and tell them where it is needed at the touch of a button. In an example of Iridium’s collaborative nature, they have not kept these new capabilities to themselves but have offered it to their partners as well. Although there is an Iridium-provided default response to the panic button, the operator will also let other companies sell services based on this emergency channel.
Beyond simple devices, Iridium also has announced that they will license their satellite communications technology to their partner companies, allowing them to craft special devices and services. This sort of technology sharing is very much in Iridium’s best interest, as its success is tightly linked to its partner companies. This works because Iridium’s hardware sales are less important than the sale of network bandwidth. In the first half of 2011, 68 percent ($126,326,000) of Iridium’s revenue was from the sale of services, 8 percent ($14,557,000) was from “engineering and support services,” with only 25 percent ($46,323,000) from the sales of hardware.
This is how Iridium has gone from bankruptcy and the threat of being de-orbited to having more than 500,000 subscribers with the ability to build a second-generation constellation. They have built a business on enabling people’s good ideas as well as their own products. With Iridium Force, they seem to be move even faster along this successful track. As long as Iridium can harness the broad mobile device and applications market to develop devices and services that will run on Iridium’s network, they will continue to grow and their future will be bright.
Max Engel is an experienced satellite industry and telecom industry analyst and founder of The North Star Consultancy. He can be reached at [email protected].