SpaceX’s satellite internet provider, Starlink, aimed to have 20 million users by 2022 but ended 2022 with only 1 million customers. As of now, Starlink’s user base stands at 1.5 million. While the company generated $1.4 billion in revenue last year, it fell far below its 2015 prediction of $12 billion in revenue and $7 billion in operating profit. Although the revenue increased significantly compared to 2021, Starlink’s mission to provide satellite internet worldwide has not gained the expected traction.
The challenges faced by Starlink include high equipment costs and expensive rocket launches. Nevertheless, satellite internet remains a crucial innovation to connect remote areas with limited or no access to traditional internet services. SpaceX has already launched 5,000 Starlink satellites into low-Earth orbit, continuously expanding its coverage.
Jonathan Hofeller, the Vice President of Starlink, mentioned at the World Satellite Business Week conference that SpaceX conducts two launches per week to extend Starlink’s coverage.
The equipment cost plays a significant role in the low number of subscribers. Residential Starlink antennas are priced at $599 each, while high-use customers, such as businesses, pay between $2,500 and $150,000. Initially, SpaceX sold the devices at a loss with a manufacturing cost of $3,000. However, Hofeller stated that the terminals now cost under $600 each to produce, and further price reductions are crucial for success.
To attract more subscribers, Starlink needs to lower the initial equipment costs compared to cheaper terrestrial options like broadband or fiber-optic. Starlink’s monthly costs range between $90 to $120, depending on the location, while broadband and fiber-optic options offer both a lower monthly bill and a more reliable connection.
In an effort to diversify revenue sources, Starlink has formed partnerships with various enterprises. For example, the company recently partnered with SES, a European satellite operator, to provide satellite services on cruise ships, with the goal of reaching millions of new customers. Starlink also plans to collaborate with international shipping companies, offshore oil rigs, and airlines.
Although Starlink experienced revenue losses in the past two years, it saw a small profit in the first three months of 2023, according to the Wall Street Journal.