No one is ready to call Space Communication Corp.‘s (SCC) awarding of the Superbird-7 contract to Mitsubishi Electric Corp. (Melco) the beginning of a major shift in the satellite manufacturing market. But many in the industry are keeping an eye on what could be a new competitor in an already crowded arena.

SCC announced Nov. 1 that it will use Mitsubishi’s DS2000 satellite bus as the basis for its next satellite. The use of a homegrown platform for the Japanese spacecraft should worry U.S.-based manufacturers the most, as the 18 Japanese broadcast and commercial communications satellites currently in orbit were manufactured in the United States.

Superbird-7 will carry 28 Ku-band transponders and reside at 144 degrees East. The spacecraft will have an orbiting life of at least 15 years and is expected to launch in the first quarter of 2008. Mitsubishi also will select the launch vehicle for the spacecraft, and Mitsubishi spokesman Travis Woodward told Satellite News the company expects to name the rocket by the end of 2005.

For SCC, awarding the Superbird-7 contract to Mitsubishi is a bit of a gamble since the DS2000 does not have an extensive history. “The nature of the satellite market tends to put emphasis on orbital delivery records and to some extent this is one reason the United States has dominated Japanese commercial satellites,” Woodward said.

Mitsubishi Electric acknowledged that Japanese manufacturers have suffered in the satellite manufacturing market due to lack of a cost-competitive platform offering. The company said in a release that the Superbird-7 contract was accepted because the cost-competitiveness of the DS2000 platform was demonstrated by its use on the Multi-functional Transport Satellite-2 mission. Woodward, citing confidentiality agreements between Mitsubishi Electric and SCC, declined to disclose the value of the contract.

What specific factors went into SCC’s decision to select Mitsubishi is unknown, as the company declined to provide written answers to e-mail questions in time for this article, and Satellite News was unable to reach SCC by phone.

Eui Koh, president of the Asia-Pacific Satellite Communications Council speculated that price played a key role in SCC’s selection of Mitsubishi Electric. Mitsubishi “has delivered many scientific satellites to the Japanese government,” Koh told Satellite News. “Although its technical capability was proven, its price was not competitive before. I have no idea what the contract price of Superbird-7 is, but many factors might have been factored into selecting [Mitsubishi], including a strategic lower price.”

A Competitive Threat?

Mitsubishi Electric’s win should raise alarms among U.S. satellite manufacturers. Since 2000, Japanese operators have ordered 11 commercial satellites (including Superbird-7), with 10 of those contracts going to U.S. manufacturers. That represents 13.5 percent of the 74 satellite manufacturing contracts announced by U.S. satellite manufacturers during that time period, according to Futron Corp. (total contract orders are based the number of contracts publicly announced per year by U.S. satellite manufacturers and are not modified to reflect canceled orders – see chart for more details). However, it should also be noted that Japan operators in total have not ordered more than 3 satellites in any given year since 2000.

At least one U.S. satellite manufacturer is not yet ready to call Mitsubishi Electric a competitive threat. “I don’t think we see this as a significant shift in the marketplace based on one order,” Dee Valleras, Lockheed Martin spokeswoman, told Satellite News. “We will have to wait and see what happens in the future.”

Valleras noted Lockheed Martin continues to foresee maintaining a stable market share at about 25 percent to 35 percent of the satellite manufacturing market. She added there are “other significant factors, particularly reliability and heritage, that influence [the market] and those are among the major reasons that we have return customers such as JSAT and SES that continue to buy satellites from us. BSAT also has returned as a customer.”

Woodward declined to say how many commercial contracts his company is hoping to acquire throughout the next few years, whether the company is competing for other contracts at this time or how many commercial orders it currently has open.

In the long run, the competitive threat will hinge on Mitsubishi Electric’s ability to launch a reliable satellite, Koh said. “Seeing many on-orbit satellite failures lately, if Melco delivers a good satellite to SCC, Melco’s position could be enhanced for future contracts,” he said. Superbird-7 “is a very important test bed for Melco [in terms of opening up] further market even beyond Japan.”

–Gregory Twachtman

(Dee Valleras, Lockheed Martin, 215/497-4185; Travis Woodward, Mitsubishi Electric, Travis.Woodward@hq.melco.co.jp)