Apple and Amazon Partner on Satellite Deal

Counting satellites and subscribers

Amazon said on Tuesday that it’s agreed to acquire satellite company Globalstar, a major step for the e-commerce business as it works to build out a space-based Wi-Fi service through its Leo initiative.

Amazon also announced that it signed an agreement with Apple to provide satellite connectivity for current and future iPhone and Apple Watch features. The partnership was made possible via an existing deal Apple already had with Globalstar.

Amazon said on Tuesday that it plans to work with Apple on future satellite services. “Amazon will continue to support iPhone and Apple Watch models currently using Globalstar’s existing and planned upcoming low Earth orbit satellite constellations, being manufactured by MDA Space, and collaborate with Apple on future satellite services using Amazon Leo’s expanded satellite network,” a news release read.

Source: Barron's via Apple Stocks

NB: I assume Apple has wanted to steer clear of Starlink but it's not clear that was a primary consideration in choosing Globalstar.

The deal gives Amazon access to Globalstar’s network of two dozen satellites. Amazon has the aim of deploying about 3,200 satellites in Earth’s low orbit by 2029. Amazon currently operates a network of more than 200 satellites and is preparing to roll out its satellite internet services later this year.

Globalstar powers Apple’s “emergency SOS” feature and had received an investment of $1.5 billion for 20% share. Under that development, the network would expand to 54 satellites. Amazon and Apple have signed an agreement to continue the services.

Incidentally, given the acquisition price, Apple's $1.5 billion investment is now worth $2.13 billion.

The acquisition of Globalstar by Amazon is a positive for Apple as it ensures there is additional investment in space-based networks and thus there isn't the possibility for a single supplier situation. Apple's investment in Globalstar was already a signal of their intention to sustain competition. However, it should be understood that space-based networks were never going to rival land-based except for remote locations and emergency or military use.

Starlink, considered the dominant player, serves about 11 million users. I would note that 11 million is 0.1% of the number of cellular subscriptions worldwide.