Iridium Case Study Case Study Briefing Satellite Sector Introduction Iridium Introduction 6-Force Model Analysis Iridium Strategy Summary Group 4
Case Study Briefing This case study will mainly use (5-force + complementary force) model to do an analysis on satellite communication industries and Iridium company, and review
what the satellite sector and industries looks like
what services Iridium provides
what customers Iridium serves
how Iridium shaped global strategy and built up distinctive competitive advantages
What the satellite sector and industries looks like (1/3) Satellite Sector Satellite Application or Solution Industries Satellite Infrastructure Industries Satellite Services Industries SupplyInputs ProvideComplements Satellite Hardware Industries (Satellite/Gateway) Maritime/Aviation Solution Industries Satellite Radio/TV Service Industries Government/Military Solution Industries Satellite Communication Service Industries Terrestrial Cellular Networks Industries (GSM/CDMA/TDMA) Emergency/Humanitarian Services Solution Industries Satellite Voice Service Industries Satellite Terminals Industries (Satellite Phone, Modem, Voice/Data Transmitters) Satellite Roaming Service Industries Mining, forestry, oil and gas Solution Industries Satellite Page Service Industries Satellite Data Service Industries Transportation and utilities Solution Industries
What the satellite sector and industries looks like (2/3) The satellite constellation could be launched in 3 kinds of orbits in the space - LEO, MEO and GEO. Distinct competitive advantages for the first movers to launch LEO satellites because of scarce bandwidth and space in this tier. Opportunities for LEOs companies for providing high quality and reliable voice communication from technicalperspective.
What the satellite sector and industries looks like (3/3) Provides affordable, high quality satellite voice and data service across over 120 countries worldwide with 44 LEO satellites Offers the only truly global coverage for satellite communications, is the only company offering customers a guarantee of 100% satisfaction with 66 LEO cross-lined satellites Opportunity for Iridium: Share China’s Economic growth Opportunity for LEO: 80+% of the land remained outside a terrestrial cellular network Complementary for LEO: GSM provide terrestrial communication services. Substitutes for same coverage: GSM provides lower price and better mobile communication services than LEO satellite communication services
What services Iridium provides Monitoring Asset Tracking Safety Services Your global safety net Never out of sight Data on demand Automation & Control Weather Fleet Management No matter where or when, you're in control Stay updated. Anytime. Anywhere From dispatch to destination Crew Calling Netted Communications Email Personnel Tracking Stay connected - no matter where you go Far away, close to home Always at their side Communication that moves
What customers Iridium serves Business to Business or Business to Government Business to Consumer 2000 Year Expeditions Aviation Maritime Business Traveler Military Forestry Oil & Gas Adventures Sailing Transportation Rally
How Iridium shaped global strategy and built up distinctive competitive advantages 2000 Year Buyer: Lack of customer responsiveness, only 27,000 subscribers by April 1999; but forecast was 240,000. Rival: Incentive marketing campaigns from ICO and Globalstar, much lower price for similar services Supplier: Sprite push Iridium to cut off 65% price Substitute: GSM/CDMA/TDMA networks provide better quality mobile communication and data services than Iridium for the 20% terrestrial coverage, even roaming services. Potential Entry: High startup capital, High operation cost, High technical entry barriers. Complementary: Seldom Advantage: Truly global coverage with LEO satellites; No latency. Weakness: Hard to manage the complexity of the system and deal with the collaboration. Opportunity: Cover the 80% of the globe outside of terrestrial network; Smaller and better power satellite phone comparing to GEO terminals; Launch the 1st batch of constellation of satellites on the LEO. Threat: Run out of cash, and go bankruptcy as a first mover. Buyer: Changed customer segments from B2C to B2B or B2G, reach to economic scale. Rival: ICO went bankruptcy; Globalstar is not global coverage. Supplier: More suppliers, less bargaining power than before. Substitute: 3G/WiMax networks provide faster wireless 1G bandwidth for the 20% terrestrial coverage, such as Clear.com. Potential Entry: There are more and more national or private commercial companies running satellite business, and the startup capital will be lower than before. Complementary: Launched partner program, 200+ partners on providing all kinds of complementary solutions to boost the potential demands. Advantage: Combined with GHL Acquisition Corp, free debt; Truly global coverage; Iridium Next will be launch at 2015. Weakness:… Opportunity: Globalization and BRIC economic growth brought new opportunities. Threat: More and more satellites on the LEO, satellite crash.
Iridium Strategy Summary Moving forward to cost leadership by partnership with GHL Acquisition Corp, free debt. Establishing distinct competitive advantages by leveraging for globalized differentiation strategies:
Only one truly global coverage with LEO constellation of satellites;
Better customer segmentation against B2B and B2G;
The complementary solutions by partner program;
The Iridium Next with better bandwidth, new services and devices and IP technology.