How NewSpace changes the S-Curve of space ventures

The life cycles of technological innovations can be described using an ‘S-curve’ which maps the financial return of the technology over time. In the early stages, the technology is immature and requires of investment to develop. Over time there is a positive in return as the technology is adopted, before an eventual decline as the technology reaches its limits and becomes replaced by new technologies.

In the traditional space industry, the typical R&D and product development phase can be very lengthy, ranging from at least 5 years and lasting up to 15 years or longer. As this development phase comes with associated costs, the extended duration can deter the progress of space innovations that need to be funded during this period. If the innovation and company can survive through the initial phase, they can benefit considerably, with the adoption and harvesting phase typically reaching 10-15 years.

With technological and business model trends converging to bring about the ‘NewSpace’ phenomenon, the traditional models for the technological innovation lifecycle in the space industry is changing. Improvements in costs, requirements and capabilities of sub-components, allied with the implementation of iterative, cyclical design processes has led to a reduction in the product development cycle and enabled the production of space technologies and systems for less investment than traditionally required. Simultaneously, these changes have increased the speed of commercial adoption and exploitation, leading to faster commercialisation of space technologies. The two effects work together to effectively shift the traditional S-curve for space technologies left.

Traditionally, space technologies have differed from ICT technology in both the initial early stages, as well as in the phase of positive return. Generally, space technologies require higher upfront investments over longer periods of time compared to other ICT technologies. The product development phase in the ICT industry is only 1- 5 years, compared to the 5-15 years seen in Space. This disparity emphasises the need for larger investments and high capital requirements seen in the Space industry.

This shortening of the life cycle of technological innovations in space can be expected to continue as space systems and components are further improved and upgraded with the continued advancements in manufacturing technologies, sub-components and electronics as well as digital transformation and more agile processes.

Read more in the European Investment Bank’s report on “The future of the European space sector: How to leverage Europe’s technological leadership and boost investments for space ventures”, produced with the consultancy support of SpaceTec Partners.

http://www.eib.org/en/infocentre/publications/all/the-future-of-the-european-space-sector-report.htm

Design by: Andrij Fil Web Development: Rock The Web