SpaceX’s entry into $70 billion U.S. launch market draws Lockheed jab

"The Defense Department on Nov. 27 directed the Air Force to end a launch monopoly" "A week later, the service awarded the trial missions to Musk’s firm, known as SpaceX." "SpaceX...now has the opportunity to prove that its rockets are capable of launching satellites serving Pentagon planners, ground troops and the nation’s spies." "The missions, scheduled for 2014 and 2015, are designed to help the company become certified to carry the military and spy satellites."<p>- Much will be made here of Lockheed's comments. To me the real story is a h/t to government for opening up and encouraging disruption in a key market. Given the general negativity (often deserved) towards government by entrepreneurs it's important to acknowledge when they do positive things.

<i>“You can thrift on cost. You can take cost out of a rocket. But I will guarantee you, in my experience, when you start pulling a lot of costs out of a rocket, your quality and your probability of success in delivering a payload to orbit diminishes.’’</i><p>This sounds similar to the cry of every company that is about to be painfully disrupted.

Lockheed and Boeing are both very capable of building planes at scale, and in a competitive environment. Currently their space vehicles are built on a cost-plus model, but I think that L-B can adapt. Musk has an advantage today in cost, and should be able to maintain that for a few years, but don't think that Lockheed or Boeing can't compete once they realize that the gravy days are over.<p>It should be an exciting next decade for space travel. Maybe all the sci-fi I read will start to come true. Getting anything into space is a big challenge and hopefully soon the market will have several private companies competing in a real market for space travel. For a nice short story, look up "The man who sold the moon" by Robert Heinlein. Then we can discuss whether or not Elon Musk is the re-incarnation of the fictional character DD Harriman.

Of course Lockheed is upset. They got used to getting fat contracts with money amounts that had nothing to do with the cost of what they were building. Now they'll have to actually compete as a normal company would do in the market.

Lockheed is going to be in for a rude awakening one day, the jab they're giving SpaceX is nothing compared to the jab SpaceX is about to deliver in return.<p>Price is indeed just one factor in competition. But if your reliability is the same as or equal to the competition and your price is substantially lower the door is wide open for a massive shift. Ignoring that or making fun of it isn't going to help one little bit. Maybe Lockheed is willing to postpone slashing their prices until they are absolutely forced to but by then it may be too late to stop the shift from happening.

Some days ago, I toured a Lockheed plant. It was an amazing experience overall. Watching how <i>airplanes</i> get built inside a building. The scale of it just blew my mind. But, at the same time, I was looking at the business aspects of it. In my mind, what I was seeing was a business operating as it still was the 60's. Sure, there were some robots, and a lot of automation. But the whole underlying production pattern was old. made me realize that Lockheed peaked a long time ago and is now riding the gravy train. I'm sure projects like SpaceX will end up replacing them. Funny thing is that it won't take a long time. If Musk manages to turn himself into a good governement supplier (meaning he can make a good track record (so far so good)), then all these old behemoths will have their days counted.

"First they ignore you, then they ridicule you, then they fight you, then you win."

The pot shots at LM are a little bit misplaced. Let's not forget that it was the DOD and LM, Rockwell, etc, that built all of this technology in the first place. The industry is now mature and ready for competitive, cost-focused companies, but SpaceX is riding some very long coattails here.

&#62; <i>You can take cost out of a rocket. But I will guarantee you, in my experience, (snip) your quality and your probability of success in delivering a payload to orbit diminishes.</i><p>What else, conceivably, could Lockheed say?

Knowing that the military-industrial complex has strong influence on US government and its agencies one has to both wonder and be surprised that SpaceX (presumably not part of that complex) gets such a lucrative account. NASA is one thing but US military...

In sales they teach you that making fun or otherwise disparaging your competition is not the way to close deals. I guess it doesn't apply when you're a billion dollar corporation and you can throw your weight around. Or think you can?

Well, they've stopped ignoring! Next will be attacking.

This must be my favourite (worst) argument ever:<p>“Cost doesn’t matter at all if you don’t put the ball into orbit," said Lockheed’s Stevens, who is retiring as chief executive [officer]...<p>Effectively trying to rationalise doubling costs of every project as "necessary". He thinks this will win him credit in any industry?

I have a list of contra-indicators, which are indicators that I use to probabilistically look for interesting industries that are about to change a lot/see a lot of disruption/have various competitors who are about to head downhill.<p>Making fun of your competitors or suing them into the ground to show your own superiority is indicator #7. If you have to talk to explain your walk then you will soon be mocked.<p>MSFT is doing that with it's Google attack ads. AAPL is doing that with its various Samsung lawsuits and general adolescent behaviour.

Its a great timing for SpaceX as all government agencies are looking to reduce their costs with fiscal cliff and all.

Have anyone noticed that Musk is distrubing too much in two important industries whith billions of bollard involved: military/space and transportation? I am seriously concerned about his health, if you know what I mean...

Launching a multi-billion dollar satellite is a different than a hello world rails application. The ULA record of successfully putting dozens of satellites into the _correct_ orbit is important here. Which I don't even think SpaceX has done yet.