Effects of Changing Economics on Space Architecture and Engineering Gary Oleson April 12, 2016 Engility Proprietary Information

Accelerating Changes Changes in Progress –Small satellite (smallsat) applications –Cost reductions –New markets Changes Under Development –Affordable, dedicated smallsat launches –Affordable super-heavy launches –Expanded market penetrations –More cost reductions –More new markets Engility Proprietary Information 2

The Global Space Economy Space economy growth consistently outperformed global economy Space startups outpaced every other industry Engility Proprietary Information 3

Space Industry Markets US government share is 13% and dropping Most commercial markets are telecommunications –Remote sensing is about 2% of commercial markets Engility Proprietary Information 4

The Four Percent Pattern Space is about 4% of global telecommunications Space is about 4% of total US national security Space is about 4% of total US public & private research and development (R&D) Engility Proprietary Information 5 Satellite Industry Association, September 2014.

The Four Percent Hypothesis Given the high cost of space operations, a space sector can succeed only when it: –Can deliver compellingly high value that –Can be delivered at an affordable price and –Can only be delivered from space and –Can be scaled to serve a huge market Enabling up to 4% penetration in a mature market at current costs Engility Proprietary Information 6

The Exception to Four Percent Engility Proprietary Information 7 The Apollo Project was the exception –National prestige was a compelling interest –The only time space has dominated a market –At its peak, NASA got over 4% of the total U.S. budget—about 1% of the entire U.S. gross domestic product (GDP) –U.S. human spaceflight now gets a consistent $8 billion per year Could non-spacefaring nations become a prestige market for human spaceflight?

Remote Sensing Examples Planet Labs valued at $1.1 billion in 2015 –With $183 million investment and $200 million of booked business Skybox sold to Google for $500 million after $91 million of investment Both flying prototype systems Neither are close to flying their baseline constellations Engility Proprietary Information 8

Approaches to Scaling Skybox rebranded as Terra Bella –Integrating with non-imagery data –Diverse analyses to support economic and societal decisions African Satellite Constellation –Integrating space imagery from seven companies operating 13 imaging systems –Monitoring and management services anywhere in Africa at least once a day Engility Proprietary Information 9

A Thought Experiment in Scaling Planet Labs’ lead markets are resource extraction, agriculture, and mapping –Combined revenue about $10 trillion per year –Penetration of 0.1% would give a total addressable market of $10 billion per year –Leaves out another dozen markets, including government and business intelligence Billions ($) available if you can scale to reach global markets Engility Proprietary Information 10

Developments in SmallSat Launch Smallsat constellations demanding dedicated launch –Many potential uses not yet explored Engility Proprietary Information 11

A Future Era of Hugesats? Falcon Heavy - first affordable heavy launch –What will people invent to use 53 MT in LEO? Engility Proprietary Information 12

Markets Next and After Next New space telecommunications –Internet services directly from space –Could expand $5 trillion telecom market Commercial space stations –Biomedical research market = $300 billion –Medical delivery market = $6.5 trillion –Tourism market = $1.25 trillion –Spacecraft assembly market = ? –National prestige market = ? Engility Proprietary Information 13

Capture Small Shares of Big Markets Reduce costs to allow greater penetration of old and new markets Invent compelling new space services to access new markets Scale delivery of space services to large global markets Engility Proprietary Information 14

Questions? 15 Engility Proprietary Information