Amazon AMZN is rushing to expand its business line with a global Internet venture called Project Kuiper. The company wants to set up its own satellite Internet network, which can help it to add more customers worldwide.
Amazon’s Grand Space Project is Outright Ambitious
The ecommerce giant plans to launch a network of 3,236 satellites in space to create the interconnected network, which can provide high-speed Internet worldwide. According to Morgan Stanley analyst Adam Jonas, Project Kuiper is a “$100 billion opportunity.” The investment bank’s estimate is based on its belief that over the next two decades, space economy will grow to more than $1 trillion, CNBC cited.
Amazon has already started the groundwork for Project Kuiper. Last year in November, the company said that AWS Ground Station was constructing a network of 12 satellite facilities across the globe. In addition, AWS partnered with Iridium Communications last year to develop CloudConnect, a satellite-based network for IoT applications.
In fact, Amazon hired Former SpaceX vice president of satellites Rajeev Badyal and a couple of his team members to work on Project Kuiper, CNBC reported in April. With this kind of expertise, fast progress is expected on the satellite Internet network.
What Sets Amazon’s Kuiper Apart From its Competitors
Project Kuiper already has many competitors like Telesat, Boeing BA, Softbank-backed OneWeb and SpaceX’s Starlink. The rising demand for Internet-based services is clearly pushing the need for a global Internet network, which is exactly what these companies are banking on.
In fact, Facebook FB and Alphabet GOOGL are also experimenting with Internet satellite networks with their respective projects such as Facebook satellite and Loon.
But the challenge is to provide such fast Internet connections in remote and rural places on earth where ground-based connection systems haven’t been established yet. Also, customers aren’t just confined to these places. Passengers in ships and airplanes, and those seeking real-time data from ocean buoys and oil rigs are part of the target list too.
The reason why Amazon could be a leader in this arena is because it has the necessary advantages to stand out.
First, most of Project Kuiper’s satellites, if not all, could be launched using Blue Origin’s rockets, which is cost-effective. Second, Amazon actually has the funding and expertise to tackle high capital costs and overcome complicated technological challenges.
Finally, Amazon has the ability to offer clubbed services to customers. Therefore the ecommerce giant could combine Internet access with its wide range of other significant services, an option its competitors’ lack. This means that it is more attractive for customers to choose Amazon’s broadband services rather than pay for a standalone Internet network.
How Project Kuiper Will Boost Amazon’s eCommerce?
Project Kuiper would benefit Amazon immensely. It greatly increases the company’s addressable market. After all, a higher number of internet users means more business. It won’t just benefit the company’s ecommerce wing, but also cloud services, Internet and any other Internet-services-related business Amazon steps into.
According to a Statista report, there were 4.4 million active Internet users globally as of April 2019, which is about 58% of the world’s population. With Project Kuiper, Amazon could get access to as many as 4 billion new customers, Chad Anderson, Space Angels CEO, told CNBC. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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