Iridium – the satellite phone always rings twice

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Scan originally appeared in Wired 07.03, March 1999.



To an astro-buff / business strategist like me, Iridium is a fascinating story, and it’s only becoming better these days.

In the nineties, Iridium spent $5 billion of Motorolas and other investors money on developing and deploying a revolutionary satellite phone system: 72 satellites were put into Low Earth Orbit through 15 flawless rocket launches in a time-span of a little over a year in 1997-1998. The system was brilliant and worked exactly as designed. The only problem was that the design hadn’t taken into account the realities of Planet Earth below.

The phones were clunky and cost $3.000, they didn’t work indoors, the call-rates were astronomically high (as one would expect with a satellite system), and it basically turned out that all those high-powered business-men Iridium went for just weren’t interested. Much to no-ones surprise, these guys didn’t really spend their time in the deserts or on the North Pole, where Iridium had excellent coverage – they were more prone to be sitting in the hotel bar, indoors, with zeros signal-bars on their sat-phones.

Iridium became one of the most spectacular business failures ever seen. The bankruptcy hit in 1999, just a few months after this ad ran, and there was even crazy talk about sending the satellites head first into the atmosphere where they would burn up. In the end it was decided not to do that, and instead sell the assets to a group of investors for a mere $25 million. Compare that to the $5 billion invested.

Horrible, horrible. But – fast forward to today.

Turns out that the new investors have taken good care of their satellites (except the one that smashed into a defunct Russian satellite last year, of course).

In the years since the restructure of Iridium, the new owners have focused on the part of the business that actually made sense: Providing sat-phone coverage not to consumers, but to rescue-workers, humanitarian organizations, military, security, shipping-companies etc.

And now, they’ve launched a bold new plan: Iridium NEXT. A new fleet of satellites to replace the old in 2014, giving the network more bandwidth than ever. And no, it’s still not consumer-time. They go for Machine-to-Machine communication, a concept I can best translate into track-and-trace on drugs. Put your Iridium-thingy on whatever thingy you have that you want to keep track of, and so it shall be. Think containers, ships, ocean buoys, that kind of thing. And, who knows, they may also take a stab at proper wireless access on commercial airlines.

They still need to raise a lot of money to carry it out. Last year, they raised $250 million when going public (IRDM on Nasdaq), but that's not nearly enough. However, these guys are clever: They offer up to 50kg of extra payload on each satellite, if you help out with picking up a part of the tab for a launch. An excellent offer for climate scientists, for example, desperate to get their equipment into space and tell us exactly how fast that ice is melting.

I can't tell if that's a sign of desperation or brilliance - maybe both. In any case, I root for them: There's nothing like a comeback story. In space. Gotta love it!

Update: This post is being discussed on Reddit


Sources:
Satnews Daily
BusinessWeek
Wikipedia
Wired

Comments (5)

Great stuff; Thanks for revisiting this.

I remember those cryptic ads in Wired, but was much too young to appreciate anything behind it.

Love the blog, hope you get some good exposure from me posting it on Reddit!

Maybe Iridium would have sold a little better if they publicized it. I never even heard of this... and considering it cost a few billion dollars, I should have.

this pretty much eviscerated motorola. very sad.

Good post! Informative and well explained.

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