Good night, Google Loon: “The Google’s balloon-internet project aimed at providing internet services for the underserved is getting shut down. The subsidiary announced the project is winding down because it’s no longer sustainable”. Blame Elon Musk’s Starlink for this. As we teach in our Tekedia Mini-MBA innovation course, when a company sets a new basis of competition, incumbents could just lose hope and give up. That is what happened here: Loon has no future and any product iteration would be hopeless because Musk’s SpaceX has recorded numbers which many thought were not possible.
“We talk a lot about connecting the next billion users, but the reality is Loon has been chasing the hardest problem of all in connectivity – the last billion users: the communities in areas too difficult or remote to reach, or the areas where delivering service with existing technologies is just too expensive for everyday people,” Alastair Westgarth, Loon CEO wrote on Medium.
“While we’ve found a number of willing partners along the way, we haven’t found a way to get the costs low enough to build a long term, sustainable business. Developing radical new technology is inherently risky, but that doesn’t make breaking this news any easier. Today I’m sad to share that Loon will be winding down,” he added.
Last July, Loon launched the internet balloon in Kenya in partnership with Telkom after many trials, and recorded a measure of success that kept hope alive that the project will be successful.
This testimonial did it: “Hall [a British user] had been getting download speeds of only 0.5 megabits per second with BT internet, he said. Now with Starlink, he’s averaging 85 Mbps.” With that, many providers would be shutting down very soon because Musk has changed the game even before he starts!
There has never been in the history of the world where a man focuses on dealing with many big problems, at once, and making tons of money doing so. He is peerless, and the world is better that he is here.
But his work has been largely esoteric when it comes to places like Africa, the land of his birth. But that is changing very soon. Yes, Elon’s other company – SpaceX, the rocket one – is now shipping his Starlink kits to selected customers in Europe: “Hall had been getting download speeds of only 0.5 megabits per second with BT internet, he said. Now with Starlink, he’s averaging 85 Mbps. “Within the hour we ran a Zoom quiz with grandchildren — it was wonderful,” he said.”
All these balloon-based companies will fade as the satellite era begins for rural broadband. Satellite has better unit economics and the technology will just keep getting better. Some GSM operators would be on this crosshairs also.
Comment #1: Of note, rural dwellers tend to be at the bottom of any national average household income. It will be interesting to see how affordability will come in to play with Starlink’s setup cost at about USD 500 and a monthly recurring cost of USD 100.
Comment #2: This is why I have issues with Silicon Valley perspective. The RISE of one thing is always literally interpreted as the DOWNFALL of another. Starlink is not the reason Loon went down. When most people were busy here celebrating the launch of Loon just few months ago, I made it clear that the thing “ain’t gonna fly”. It was so obvious then, not because of Starlink, but because of the nature of those businesses (and the way the Future is shaped). They were designed to fail from the beginning. The e-commerce drone hype is next, it will take longer to collapse, and to be fair, even though it won’t be a total collapse like the Loon, it’s still going to be a collapse. It won’t take off in the manner people are expecting it will. There’s a cap on its Promise.
One thing is clear to me, and it’s the fact that Siliconites don’t usually have Clarity of Purpose and or Process before doing anything. They just run it like an experiment. If it works, good, if not, good. Google Loon is exactly that, an experiment. It was never serious, by design. Loon puncturing isn’t anything to be surprised about. Starlink didn’t kill it, it killed itself by Design. A time will come when you all will start taking the things I say very seriously.
My Response to #2: Great insight – but would there still be Loon if there is no Starlink? I do think so. Loon was heading to win a rural broadband connectivity contract with US government. That was Loon’s deal. But just from nowhere, Starlink took it. I still believe this: without Starlink, Loon would have picked that close to $1 billion and it would still be here. That Loon’s issue does not mean it could not serve “niche” rural areas the big telcos have forgotten. But with Starlink there, from US to EU, Loon’s sees no future.
Comment #3: He is selling 100Mbps/ 20 Mbps (monthly information rate) at $99. He has killed terrestrial telecommunication companies. Behold here comes the satellite based internet with no line of sight challenge and at low earth orbit less latency challenge. The speed means the stock market will be his friend soon. And the whole fiber thing will be like a past glory. Then he will begin to deliver 5G. And with his space ship he can do robotic repairs and replacement easily. Musk is the future of business.
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