Launch is foundational to everything you do.
Absolutely. You are 10 years ahead of the world in reusability, but Starship is designed for rapid reusability and dramatically more mass to orbit at a much lower cost. So, can you just talk about launch, how important it is, and then Starship in the context of that?
Yeah. I think launch, if you're going to be a space company, I tell people it's hard to be a space company and not have assured access to space. And so we started out making sure that we had launch nailed down, and Elon really focused on driving down the cost of access to space at a far cheaper price than anyone had ever even thought of before. We're now the lowest cost per kilogram to space ever in the industry, and we're looking for Starship to do another 10x improvement as we get to rapid reusability with Starship. So, it is definitely at the core of what we do and it's the enablement for all of the other businesses, whether it's Starlink or direct to cell very soon or now AI compute. And so I think you absolutely have to start when you talk about SpaceX by talking about our launch capabilities, and Starship will be, to your point, next level because what we're doing now is taking on this huge, I would say like the holy grail of rocketry, which is rapid reusability. It's one thing to bring back the first stage, which is amazing and transforming the industry, but we did that 10 years ago with Falcon. What we're doing now is we're flying the largest rocket ever built with the goal of it getting to aircraft-like operations. And that is a completely different dynamic. But I think that's what it will take to be that catalyst for the whole space industry related to turning the 2030s into something that we had expected when we were kids related to the space industry.
Where in the Starship program are we? We just had a launch. It was a V3 of the ship and the booster. It felt like, I will admit, it felt kind of like a high-risk event heading into an IPO, but from my perspective and as far as I can tell from the SpaceX team, it seemed very successful. So, what did we learn? Where are we with Starship? And where are we on that path to rapid reusability?
I think our first launch of V3 that you're referring to from just last week was a huge success for us. The fact that we were able to demonstrate the full system capability, the new V3 Raptor engines, all of the changes that you saw on the bottom of the vehicle, all the operational changes that we did as well, and then you saw that soft splashdown at the end of the second stage, gives us a lot of conviction about where we're going, not just in years to come, but really even in the next couple of flights. And that's really exciting because that is, as we were talking about, that platform or catalyst for the rest of the business. Having a rocket that can take 100 metric tons to low Earth orbit is going to be hugely important for everything we're about to go do.
And that's 100 metric tons at what cost relative to Falcon? At what cost?
Well, I think as soon as we can bring back that second stage to the tower and start rapidly reusing it in the next couple of years, I think you're going to experience a 10x from a cost per kilogram to space from where we're at with Falcon today. And so that is, I think, a huge springboard for multiple pieces of our business.
I think of launch as enabling a variety of applications for SpaceX as a company. And if kind of Microsoft, they had the operating system and enabled a lot of applications, launch is foundational. And the first and the biggest and most well-known application is Starlink and your connectivity business. And can you just give us a sense of the scale of that business, the growth of that business?
Yeah, it's very exciting because we actually haven't been in the connectivity business for that long when you think about it. Really having our first production satellites in space back six years ago and ramping that business to where we're at today with over 10 million customers and over 10,000 satellites that we have now flown to space and 160 plus countries around the world. It is clear that we're delivering a capability that the world really wants, and I think it just gives you so much conviction when you know you're delivering a great product. And we've had so many notes, in fact, we send out an email each month with how many communities around the world we've had a positive impact in. It's really special, whether it's indigenous tribes in Canada or down in Brazil where we're connecting schools, or in Africa where they haven't had any connectivity before. Bringing something like Starlink to the world has been pretty amazing. And so, what it's done is it's given us an extension of the mission we were talking about. First and foremost, we want to make mankind multi-planetary. But above and beyond that, now having the ability to connect the other three billion people on the planet and really bridge that digital divide has been really special for folks. And I think that really resonates. But yes, I agree. Starlink was that first piece of the business. And I think that 10 million customers can become hundreds of millions of customers around the world in time because of the fact that it's so much more efficient to deliver to so many different locations from space than it is terrestrially. And so we're just heading down that path right now. And we're incredibly vertically integrated related to it. So I think we end up being a little bit of the blockers now become our own capabilities, which is great. That's exactly the way we want it. But what Starlink also was, was it was, I would say, that catalyst for the Falcon business to really ramp up operationally because if you don't have payloads lining up, then you don't really have a reason to go from 10 launches to 22. We launched 165 times last year with our Falcon vehicles. And what we would do is we bring multiple stacks of Starlink satellites to the launch site such that when there's an opening between launches of third-party satellites, we can then, okay, we're going to take that slot for Starlink. And so now, as you go into our next phase with Starship, I think we have another catalyst like that. And above and beyond Starlink now, we're going to have AI compute satellites.
Absolutely, 100%. And I'm super excited to talk about AI compute, but I do think it is Starlink. I'd love to just double click there because I am a former telecom analyst, so it is near and dear to my heart. And just some observations that come to mind for me. One, people have forgotten how big the telecom markets are. I just call it round numbers. 800 billion for kind of internet access, 800 billion for cellular connectivity. So 1.6 trillion market plus or minus to within the nearest 200 billion. And what really strikes me as a student of the telecom industry is there's never actually been a differentiated or disruptive product in telecom before because everybody has access to the same towers, broadly speaking the same rights of way, and the same equipment. The products end up being very similar. And this was true for local telephony. It was true for long distance. It's true for cellular. I am a very serious video gamer. I'm not very good, but I play video games the way a lot of my peers play golf.
But I take it very seriously. And my grandfather used to say that age and treachery will always triumph over youth and skill. And in video game terms, that means having the best GPU and the best connectivity. At every location I've been to, Starlink is better. It is faster and it is lower latency. And I think latency is a very important point for the user experience. So can you just talk about how this product differentiation is going to help you go from 10 million to 100 million to hundreds of millions?
Yeah, I think it's pretty funny because it's for sure we'll talk about broadband in a minute, but especially if you think about the direct-to-device that we're going to ramp, our next generation of direct-to-cell or direct-to-device will be 5G quality in the next two years. We're about to bring something that's pretty unique to say the least and something I think anyone would want, which is to go anywhere with your phone, have global roaming, be out in the middle of the desert on the highest mountain and not have dead zones. I mean, these are pretty special things that I think people would want and probably pay extra for, but especially if it's the same price. So, I think we are very excited about bringing a very differentiated product to the market. Again, it feels great when you're bringing a product I think that's great for everybody. It's also going to be great for disaster recovery and when there are emergencies, the fact that the network doesn't go down and you don't have to worry about the tower being out. But circling back on the broadband side, the fact that you can deliver low latency to your point, I think that's really critical. Low latency, high-speed capability really everywhere, other than the countries that I'm not allowed to go into, is something that just won't make sense terrestrially. And so I think it will become harder and harder to justify many of the deployments on a terrestrial perspective because Starlink now exists. And I do think people really now are starting to see even on aircraft, when you start to see all the announcements, United Airlines now, American Airlines just announced, and many of the others without listing many over and over again, getting on an airplane and having that type of low latency, high-speed experience really kind of opens people's eyes to what it could be at their own homes or offices as well.
Awesome. And I do think I'm glad you brought up the disaster. What SpaceX does anytime there's a natural disaster, it has undoubtedly saved lives. Surging Starlinks for free, turning them on. This has saved lives. So outside of Starlink and orbital compute, which absolutely merits its own discussion, what are the other applications enabled by Starship or businesses? What are you most excited about?
Well, I do think on the connectivity side, those two businesses will ramp nicely. And what's also great about those is I think when people think about space, they think about the new markets that we will create in the years to come, which I agree with that. Whether it's point-to-point transportation on Earth and 30 minutes flying to Singapore kind of thing or whether it's the lunar economy, I think all of those will happen. But what I think people discount is there are massive, to your point, almost $2 trillion of existing markets just on connectivity that are existing markets today to us. And so the fact that you're able to deliver a better product in an existing Earth market before even talking about space is probably what gets missed some of the time.
And it's not just a better product. You do have a cost advantage. You're not digging ditches. You're not spending all that huge amount of upfront cost. You really send the terminal out once you've established your network of satellites. You send the terminal out and that's basically most of your customer acquisition cost. Better, faster, cheaper has been a winning experience.
Good combo in my time as a tech investor. But any one or two of those markets, whether it's freight, whether it's point-to-point travel, I think the next big one though is going to be AI compute. And so we should definitely spend some more time on that. But I think that is a market that really needs Starship to really happen. Because there are large payloads and you really are focused on cost. And so I think that's the one that's kind of near and dear for us because you already see those next two happening, right? And this will just be a significant enhancement. If I think about what Starship's going to do for our broadband satellites, our V3 satellites that we're about to fly in the coming months here on Starship, every Starship launch of those satellites brings 20 times the capability of what we're flying with a Falcon launch today. So it is a huge enablement for our broadband business and soon to bring 5G capability on the direct-to-cell.
So Starship rapid reusability, they really enable this much larger Starlink constellation that takes us from 10 million to the hundreds of millions. They actually lower the cost of Starlink further by lowering the launch cost. And they enable this exciting new, and they'll enable direct-to-cell which is awesome, but they will enable orbital compute. And I would love to just, people hear data centers in space and after lots of interactions on X I've realized that a lot of people are picturing like a pentagonized building floating around in space and that is not what it is. Orbital compute is racks in space. And let's just start there. I'm sure there's going to be images available to people, but just describe what one of these satellites is going to look like so people can conceptualize it.
Yeah, I love the racks in space. I might steal that from you. I think that's the right way to think about this. I actually had the same issue when someone said data centers in space internally the first time. I thought, 'Oh, wait. How are we going to connect all these pieces together?' And they're like, 'Johnson, this is literally like another constellation.' Oh, okay. But really, you then realize virtual networking has been obviously a key component of networking for a number of years now. And this is that same concept of virtually networking rack by rack to your point of satellites that look just basically like larger versions of the Starlink V3 satellite we're about to fly for broadband, a lot more solar and now compute over the top related to, we'll just start with Nvidia GPUs on there and a large sheet of metal from a radiative cooling capability perspective, but otherwise looks largely the same as what we're flying from a comms perspective, although we've pulled the comms payloads off obviously. But really I feel like people think that this is a completely new concept for us and it's not. It's a kind of a logical extension of the satellite technology that we're already using today with all the connectivity down to Earth, the inner satellite links connecting the different satellites together, the prop systems. I mean, there's so much of what we're already doing with Starlink today that we immediately get to benefit from on these. And I think when people see the picture of one satellite versus another satellite, they kind of have an aha moment of, oh, well, these guys are going to be able to do this very quickly.
Absolutely. Yeah. So, and just maybe help anyone listening conceptualize a rack, an Nvidia rack, the NVL72 rack. A server is like, I don't know, a couple of pizza boxes. And then you stack those servers together. You make a rack eight feet high, three feet wide, maybe four or five feet deep. And that rack is going to be at the center of the satellite. It may not have those exact dimensions. It may have more or less than 72 GPUs depending where the engineers land, but we're going to have that rack. We've got solar wings. I tried to eyeball it. It looked like they were 200 or 300 feet long, maybe 150 feet long out to each side. And then it's in a sun-synchronous orbit and the radiator extends behind it so it's always in the shade and cold. And so let's talk about what that design enables, what advantages that enables from a first principles perspective from orbital compute, around power, around cooling, around cost, around latency back to Earth.
Yeah, it's funny. So I agree on all four and the one that I think maybe start with is regulatory, right? The fact that people are already having concerns about I don't want this data center in my backyard is clearly a trend, a little bit concerning trend. And so the fact that we can bring a clean energy, good for everybody type solution by just sending these up and being powered entirely off the power of the sun is pretty amazing. The fact that the solar cells are in space and get roughly five times if not more energy per cell than they get terrestrially because they don't have to deal with going through the Earth's atmosphere and they're in sun sync where the sun is on those cells 24 hours a day. And the fact that you can make them cheaper because you don't need the glass protection on these cells because there's no environmental issues when you're up in vacuum. You start to see these first principles kicking in on the power significantly. And from a cooling perspective, which is one of the more challenging things already to deal with on the terrestrial side. If you walk in one of our data centers, all that liquid cooling and all the plumbing that we've had to do and really engineering around that to really figure out innovatively how to do that becomes very straightforward radiative cooling, simply kind of extending the radiative cooling solutions that we're doing with Starlink and now doing it with AI compute. And then obviously no land lease to deal with. And so really it then becomes your cost is your satellite and your launch. And I look at it as being a tech person because I was semiconductors before space, you kind of have those cost curves traditionally that you would have, right? And as you ramp up in volume in time, your costs go down and you're benefiting from Moore's law or maybe soon a different type of Moore's law. But if you look at the satellite, most of the cost is silicon. And so we're ramping up factories and we're benefiting from silicon cost reductions process node to process node so our costs are going to go down over the few years. If you look at the terrestrial solutions, the curve is going the other direction, right? Everything's getting more expensive, right? The way you're doing the cooling, power bills are not going down, and land regulatory is getting more and more challenging. And so I think this just all lends to better for the population and a trajectory to be significantly better from a cost perspective as well.
Awesome. And how do you think like the compute market is one of the largest markets in the world today. How do you think about the size of that market when you will enter it, and we'll talk about terrestrial compute, but when you will enter kind of like begin to have orbital compute working and maybe a range, this is really hard stuff.
Yes it is. In fact, my engineers, they've heard me explain where it's kind of a logical transition and we've done most of the pieces of this already. They say, 'You got to just make sure people understand there's a lot of work still to do.' I said, 'I understand that.' I think and some of that is actually scaling this, scaling to the numbers that we're talking about such that you can put up gigawatts a year into space is a very hard challenge. And we have just been able to demonstrate scale whether it's launch scale or whether it's flying and building ourselves thousands of satellites a year. And that is definitely going to be one of the challenges here again that we deal with here. But certainly we're going to be able to demonstrate capabilities as soon as next year. And so it is near. And I think the ones that say we believe, like if you list kind of the people that are supporting orbital compute solutions at this point, it's basically a who's who of the tech AI industry. I won't list other people's names, but certainly Elon Musk being on the top of that list, right? But I think they think that it's a lot further away because you can't do it without launch, right? Without the rapid reusable launch that Starship is going to provide.
I will ask Grok a question. Grok being SpaceX's AI, general purpose AI. I'll ask Grok a question. The inference will happen on an orbital compute satellite and come down via Starlink direct-to-cell to my cell phone and it will be amazing. What a moment will I, whenever it happens, I will personally find that very exciting.
