In the 1960s, IBM dominated the computer market, which was often referred to as “IBM and the seven dwarfs.” IBM is prosperous today, but no longer dominant. The low-Earth orbit (LEO) satellite Internet service market today is reminiscent of that time, but it’s "SpaceX Starlink and the seven dwarfs."
As was the case with IBM, Starlink has seven dwarfs, which I have described in two fairly recent posts. Three are Chinese: Guowang, Qianfan, and Honghu-3, and four are from the west -- the US, Canada, and Europe -- Amazon LEO, OneWeb, Telesat, and IRIS². (Russia may emerge as the eighth dwarf).
Today, Apple's market cap is approximately $3.95 trillion, and IBM's is approximately $278 billion. I do not expect Starlink to drop off that precipitously, but its lead will be significantly diminished. Five of IBM's dwarfs failed, and two merged to form Unisys. I expect Starlink and all the dwarfs will survive, and the gap between them to shrink, but not as dramatically as the gap between IBM and its dwarfs. Here are some of the factors that will shape the future LEO Internet market (in no particular order):
A divided world market
After World War II, the relatively unscathed U.S. became the world’s leading power, shaping a liberal international order through its economic and military strength and promotion of democracy and free markets. Subsequent US actions like the wars in Vietnam and Iraq diminished our global stature, and Trump has accelerated that trend with isolationist policies, while China has been opening.
This leaves us in a world where some nations will deal only with Starlink and the "western" dwarfs, others will deal only with the Chinese dwarfs, and others will be open to either. This shields the dwarfs and Starlink from total global competition.
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| Approximate GDP shares (source) |
China is open to private investment
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| Landspace ownership, mid-2025, Source |
The trends set by Deng continued, and in 2014, China’s State Council opened its space sector to private investment. In 2015, the launch company Landspace Technology, which owns 48% of the developer of the Honghu-3 constellation and is planning an IPO, was founded. As shown here, Landspace provides an example of the mixed ownership structure possible in China today, and many Chinese space companies already have publicly traded stocks. Two other Chinese launch firms are moving toward IPOs, and more are in the works. Many people and organizations, including national and local governments, have stakes in the game.
Government investment and planning
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| US and China capital formation (source) |
It's not government versus private investment; it's the mix of the two. The United States government's planning and investment played a key role in advances in electronic data communication, from Morse's telegraph to Whirlwind, the SAGE early-warning system, the ARPAnet, CSnet, NSFnet, and the NSF Higher-Education and International Connection programs. However, government Internet ownership was phased out in the first half of the 1990s.
After 1978, Chinese policy favored foreign and domestic investment over consumption —for example, investing in infrastructure and (over) investing in housing —while enacting measures like the one-child policy. The Chinese government also plays an active role in planning and setting goals. The 14th Five-Year Plan (2021-2025) called for building an integrated communications, Earth observation, and satellite navigation system with global coverage.
China’s 15th Five-Year Plan (2026–2030) is expected to promote low-Earth-orbit (LEO) satellite Internet as part of its “new-type infrastructure” strategy. A Ministry of Industry and Information Technology directive calls for “accelerated development of low-orbit satellite Internet,” commercial trials, and global broadband coverage, targeting over 10 million users, including direct-to-mobile handset service, by 2030. The Communist Party recommendations include building “information-communication networks” and “aerospace and low-altitude economies” as strategic sectors. Together, these indicate that LEO satellite internet will be clearly encouraged within China’s 2026–2030 policy framework.
Note that the Landspace pie chart above refers to "State and Local Government Funds." Local governments play an important role in coordinating and financing space and other industries in China, and Landspace has several key facilities within the G60 Science and Technology Innovation Corridor. (This is reminiscent of Silicon Valley.)
Elon Musk and Donald Trump
Starlink will remain a major satellite ISP, but Elon Musk has tarnished the Starlink and Tesla brands, opening market space for the dwarfs. Many individuals and organizations view Musk's "chainsaw" cuts of federal regulators, watchdogs, experts, and agencies as detrimental and/or cruel. The most striking example of his political acts was dismantling USAID. A recent study published in The Lancet by researchers from Africa, South America, Europe, and the United States estimates that 91 million deaths were prevented by USAID between 2001 and 2021 and predicts more than 14 million additional deaths globally by 2030, including more than 4.5 million dead children under five. For a real-time update on deaths caused by our aid discontinuation, click here, and for a short documentary, click here.
Musk is reminiscent of Henry Ford. Both were manufacturing geniuses with strong political views that alienated many people. Ford was an antisemitic publisher of the Dearborn Independent, who was praised by Hitler and given the Grand Cross of the German Eagle, the Nazi regime’s highest honor for foreigners in 1938. Hitler also had a portrait of Ford in his office.
The Trump presidency has diminished the United States' stature and soft power/influence in the world. In the first year of his second term, Trump withdrew from the World Health Organization, the Paris Climate Agreement, OECD Global Tax Deal, UNESCO, and the United Nations Human Rights Council. His arbitrary, possibly illegal, tariffs have alienated allies, provoked retaliatory trade measures, and signaled to many nations that the U.S. is an unreliable ally and economic partner. Trump's (and to a lesser extent, Musk's) waffling on Ukraine, where Starlink and, to a small extent, OneWeb have been valuable assets, calls U.S. reliability as an ally into question, opening markets for the Chinese and European dwarfs.
Starlink has proven to be a valuable military asset in Ukraine, but at one point, there was speculation that Musk would stop the service. He denied that and indeed has not terminated the service, but no government, military, or other organization is comfortable with a sole supplier of a critical good or service, so Canada and European governments will not allow their dwarfs to fail, nor will the United States government, which has multi-billion dollar contracts for Starlink, Starshield, and NASA and DOD launch service. Amazon will compete for U.S. government contracts, and it is conceivable that in a post-Trump world, other western dwarfs might also. (Trump will favor Bezos now that he and Musk have had a falling out).
In the far-far future, one can even imagine global collaboration with China. In May 1961, President Kennedy initiated the "space race" in a joint presentation to Congress requesting funds to put a man on the moon and return him safely by the end of the decade, but by September 1963, he had changed to a call for collaboration in space with the Soviet Union in an address before the UN General Assembly:
Why, therefore, should man's first flight to the moon be a matter of national competition? Why should the United States and the Soviet Union, in preparing for such expeditions, become involved in immense duplications of research, construction, and expenditure? Surely we should explore whether the scientists and astronauts of our two countries--indeed of all the world--cannot work together in the conquest of space, sending someday in this decade to the moon not the representatives of a single nation, but the representatives of all of our countries.
New technology, distribution channels, and regulations
IBM was dethroned by new technologies like time-sharing, networks, and personal computers. They knew about these technologies and tried new products, but those products failed. For example, Christopher Strachey's early paper on time-sharing was widely read, and IBM had early online projects like the SABRE airline reservation system, the SAGE early warning system, and later general-purpose time-sharing systems. (While working for IBM, I first encountered time-sharing on a QUICKTRAN terminal at IBM Research and later built my dissertation on the IBM AN/FSQ-32, a bespoke IBM time-sharing system.) They offered computer networking products like System Networking Architecture and Token Ring, but they failed because of open networking standards like TCP/IP and Ethernet.
IBM was also aware of personal computers from the time of the LINC at Lincoln Labs, and sold personal computers from the early IBM 610 Autopoint in 1957 through the desktop IBM 5100 in 1975, and finally the mass-market IBM PC in 1981.
The problem was not ignorance or engineering, but the company culture, overhead, and customer base. IBM salespeople were well-paid men wearing blue suits and wingtip shoes, spending months on a sale of a large, expensive computer. IBM was not ready for computer stores and Walmart. SpaceX does not face as extreme a culture mismatch as IBM did, but workers may be unwilling to work the long hours SpaceX is known for.
As the global space industry grows, new technologies and applications will be developed worldwide, and SpaceX and Starlink may be slow or struggle to adopt them, given their commitment to vertical integration, unlike, for example, OneWeb, which has worked with partners from the start. Furthermore, the battle between Trump and universities is hurting research in need of federal funding, while China is funding research and education.
We will also see increasing pressure for global regulation as incidents like the recent stranding of Chinese taikonauts due to a debris strike occur, the world becomes increasingly dependent on space, and LEO becomes increasingly crowded. Those regulations will constrain Starlink since it already has over 8,000 satellites in orbit and over 8 million customers in over 150 countries. In the US, Jeff Bezos may have more influence over regulatory decisions than Musk, who has fallen out of favor with Trump. (Regulators face a dilemma in trying to achieve national autonomy and space sustainability.)
Starship and launch capability
SpaceX's reusable Falcon 9 rocket gives Starlink a significant advantage, but others will master reusability. Blue Origin has recently landed a New Glen booster with significantly greater capacity than the Falcon 9 on a drone ship, China's LandSpace hopes to safely land a Zhuque-3 this year, and many other companies are working on Falcon 9-class reusable rockets.
While these companies will match SpaceX's current launch capability in a few years, catching up will take much longer if its next rocket, Starship, meets Elon Musk's projected cost, payload capacity, and launch cadence goals, but they have had several test launch failures and are behind schedule. Musk has done some amazing things, like achieving routine rocket reusability, but he has also failed to meet ambitious goals. For example, in 2016, he predicted Tesla would complete a coast-to-coast autonomous drive with no human intervention by the end of 2017.
Those are some reasons I expect Starlink's competitors, the dwarfs, to survive and cut into its immense lead. I'd welcome arguments pro and con on my belief that the gap between Starlink and the dwarfs will shrink significantly, but Starlink will continue to be an important player.
