Taking the initiative to extend an olive branch, SpaceX wants to cooperate with Apple.
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The previously stalled partnership between Apple and SpaceX for satellite connectivity is now showing signs of returning to the negotiating table.
On October 23, The Information cited sources saying that to prepare for a potential future deal with Apple, SpaceX has recently added support for the radio spectrum currently used by the satellite features of the iPhone in its next-generation satellite designs.
This move means that when Starlink’s next-generation satellites go into operation in the coming years, they may be able to provide satellite communication services for existing Apple devices.
Meanwhile, James Monroe, chairman of Apple’s current satellite service provider Globalstar, has revealed an intention to sell the company for more than $10 billion, even though its current market value is just $5.3 billion.
Globalstar’s network, lagging behind Starlink in both speed and technology, is prompting Apple to rethink its partnership options. If a deal is reached with SpaceX, Apple consumers will be the biggest beneficiaries, with future iPhone devices expected to achieve faster satellite connections via Starlink’s next-generation satellites.
Technical Readiness
SpaceX is already technically prepared for a potential collaboration with Apple.
According to The Information, the company has added support for the spectrum used by Globalstar in its new satellite designs. This technical adjustment will allow Starlink to be compatible with existing iPhone devices in the future, without Apple needing to make significant hardware changes.
Starlink is currently a leading provider of satellite internet services, mainly supplying service to customers through antennas installed on rooftops or vehicles. The company recently launched its 10,000th Starlink satellite, which accounts for more than 60% of all active satellites in Earth's orbit.
SpaceX plans to significantly expand its service coverage, connecting ordinary smartphones directly to satellites, and is investing heavily for this purpose.
Last month, the company struck a $17 billion deal to acquire EchoStar’s wireless spectrum, which will help SpaceX provide faster Internet services to mobile phones worldwide.
SpaceX President Gwynne Shotwell said last month the company is working with chip manufacturers to integrate Starlink connectivity into phones. The company has established partnerships with traditional telecom operators like T-Mobile to connect its satellites directly to phones.
A History of “Grudges and Feuds”
Previous attempts at collaboration between the two companies have not gone smoothly.
According to The Information, prior to Apple’s launch of its first satellite feature in 2022, Musk had proposed that SpaceX become the exclusive satellite service provider for the iPhone for 18 months.
He requested Apple to pay $5 billion in advance, and after the exclusive period, pay $1 billion annually. Apple rejected the proposal.
Additionally, Musk has publicly criticized Apple for the financial impact of App Store fees on his social network X.
In August last year, Musk’s AI startup xAI sued Apple for manipulating App Store rankings, harming its Grok chatbot and favoring OpenAI’s ChatGPT.
Nonetheless, both sides remain motivated to reconcile. According to earlier reports, some Apple executives have long been skeptical about the partnership with Globalstar, believing Apple should instead work with SpaceX.
Globalstar’s Predicament and Apple’s Considerations
Compared to Starlink, current partner Globalstar’s network is considered slower and relatively outdated in technology.
This means that the satellite features currently offered by Apple are limited to scenarios such as sending emergency texts, sharing locations, and contacting roadside assistance in areas without cellular coverage.
Globalstar is struggling amid SpaceX’s growing dominance and is highly dependent on Apple.
In the past three years, Apple has invested about $2 billion in Globalstar. In its latest quarterly financial report, Globalstar, for the first time, issued a warning about its most important client, Apple:
Losing this customer could have a materially adverse impact on our financial position, operating results, and cash flows.
Although Apple has heavily promoted the satellite connectivity function in the iPhone as having potential life-saving safety benefits, the company has been careful to avoid measures that might make itself a telecom operator.
Reportedly, Apple still hasn’t started charging consumers for satellite services, as it does not want to be regulated as an operator. Last month, Apple announced a one-year extension of free satellite service for iPhone users, similar to a postponement announced last year.
For similar reasons, Apple is unlikely to acquire Globalstar itself, even though it has the right of first refusal.
Market Landscape and Outlook
If Apple partners with SpaceX, consumers who buy new iPhones and other Apple devices in the next few years will undoubtedly be the biggest beneficiaries of the high-speed connectivity brought by Starlink’s next-generation satellites.
According to The Information, Apple plans to add support for non-terrestrial 5G networks (including satellite) in the new iPhones as early as next year. This would allow iPhones to access full internet capabilities via satellite, instead of being limited to a small set of messaging features on Globalstar’s network.
Of course, in the short term it is unlikely that SpaceX will completely replace terrestrial cellular network operators, since satellite connections only work well when users are outdoors and have an unobstructed view of the sky.
But analysts point out that as Musk’s company further consolidates its position through the acquisition of EchoStar spectrum, it is becoming increasingly difficult for companies like Apple to bypass SpaceX.
Tim Farrar, president of satellite consultancy Telecom, Media and Finance Associates, said:
If Apple gives up trying to compete with SpaceX, then Starlink will solidify its dominance and become virtually unchallenged in this market.
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