On 12/24/2015 6:59 PM, William Claybaugh wrote:
On Thursday, December 24, 2015, Henry Vanderbilt
<hvanderbilt@xxxxxxxxxxxxxx <mailto:hvanderbilt@xxxxxxxxxxxxxx>> wrote:
Again I'd caution that traditional industry perspective may lead to
error. In this instance, both because the development costs seem to
have been kept far lower than trad industry equivalents, and because
both outfits seem to be planning to amortize them over a larger
number of flights over a longer run than is traditional.
There is not any traditional industry perspective here: the time value
of money simply is.... Taking a "40 year" perspective means accepting a
2% return; that is just math.
Choosing to so do is the privilege of wealth--noblise oblige and all
that--but there is no making up the difference on volume...do the math.
I'd suggest Amazon.com as food for thought. It's apparently been
run hard-over for growth rather than profit for most of its
existence - yet somehow it's made its founder rich enough to have a
sideline of developing boosters "..planning to amortize [the R&D]
over a larger number of flights over a longer run than is traditional."
Agreed that SpaceX is not necessarily operating at an overall profit
currently either. I'd be inclined to guess from what I've seen that
their goal is to operate somewhere near break-even, while both
grabbing more of the existing market and expanding it. With
"break-even" including paying for their (both remarkably active and
remarkably by-trad-standards cheap) ongoing R&D operation.
They seem, so far, to have been able to raise the capital to take
this approach.
The current equity bubble will burst....
Looking at these operations from a traditional industry
perspective
can lead one to assume the designs are largely fixed and very
difficult to change, and thus must be factored into economic
calculations largely as-is. But SpaceX in particular has
made it
very clear they're not following this traditional frozen-design
model at all, but rather one of continuous incremental
improvement.
Assuming such incremental improvement won't be part of the
process
of bringing reuse into the routine operation strikes me as very
likely to be a significant error.
Careful: the organizational effects of the launch failure have
not shown
up in prices yet.
I'm not sure they will, at least not to any huge extent. SpaceX may
instead treat the immediate impact as a capital cost (didn't they
recently shake the investor tree again?) and make it back over more
time than you'd expect. But yes, several months of gotta-be
expensive delay/recovery aside, it will be interesting to see to
what extent this will have forced higher costs on their ongoing
operations. My guess would be, not much - I expect they'll have
worked very hard to fix the problems revealed with a minimum of
increased ongoing ops costs.
I can't talk about what I know but I can observe that customers are
historically very aggressive about imposing lots of new process after a
launch failure.