The topic of the “real New Space revolution” is one I have come back to many times in this column. Not just because I enjoy repeating myself, but because every time I look at the sector, I see another layer that was not obvious before.
Today I want to peel that onion a little further. I want to look closely at where this revolution has actually taken us – and how, if you squint just a bit, the thing we keep calling a revolution has quietly become something else entirely. Not a clean break with the past, but an evolution. And one that bears a striking resemblance to patterns we have seen before in other industries that had to build high-value, high-reliability systems at scale.
That last part matters. Because if you want to get ahead of what is coming next, you need to understand the pattern – and the pattern has very little to do with lower launch costs or chasing the next vertically integrated baby-unicorn. Those are surface features. They are not the story.
The deeper shift, the one that decides who survives and who fades away, is something actually much more familiar.
Because we have seen this movie before. But it not be the one you think it is.
When people talk about New Space, the analogy they reach for is usually something like the dot-com boom. Move fast. Raise fast. Break things. Iterate faster than anyone around you. There is a kind of romance to that comparison – the idea that the sector is young enough to be shaped entirely by bold founders and bold capital.
But space is not a software industry with rockets attached.
In software, you can get away with releasing something half-baked, learning from the users, and patching it later. No one dies if your version control breaks. No one loses a satellite, a mission, or an entire constellation because your team deployed a buggy update on Friday afternoon.
Instead, space looks a lot more like two other industries: automotive and civil aviation. That’s because both of these sectors are also marked highly by high-quality and high-value end products which are extremely complex. Cars and aircraft, like spacecraft are systems that must work repeatedly, reliably, and under conditions that are not very forgiving. Both of these sectors have gone through a cycle where early monolithic vertically integrated companies evolved into ecosystems of smaller suppliers that eventually became messy and fragmented, and which could not deliver the necessary reliability at scale. In both of cases, after some years of painful experience, the fragmented ecosystem of small suppliers ended up reorganizing into highly structured supply chains which could deliver quality, scale, and repeatability.
Those are the real analogies we should be considering for todays space economy. Let’s take a closer look, starting with automotive.
If you look back at the early decades of the car industry. Every manufacturer was effectively vertically integrated because they had to be. They built their own components, assembled their own systems, often fabricated parts in small lots. There was no real supply chain – maybe just a local web of bespoke suppliers with their own ways of doing things, their own quality standards, their own process discipline, or lack of it.
For the first, maybe fifty years, that chaos was survivable. Cars were simple enough, and the volumes low enough, that this kind of vertical integration was a workable model. But then things got a lot more complex, and the market got a lot bigger.
Safety requirements increased. Electronics crept into the vehicle. Globalization spread manufacturing and assembly across continents so that there were options that were less expensive than doing everything in-house.
So, the big automakers began outsourcing significant portions of their components. But the process was as hoc. Large primes ended up with suppliers with widely varying capabilities and standards in many different jurisdictions and with different business cultures. This was manageable for a while, but as competition became stiffer through the 1980’s and 90’s the costs of managing (and mismanaging) this fragmented supply chain became impossible to ignore. Quality varied not just between manufacturers, but between suppliers, plants, and batches. The cost of managing that chaos ballooned.
At some point, the industry realized that you could not build high-quality vehicles at scale if every supplier used their own idea of what “quality” meant.
So, the industry did something remarkable. It standardized the definition of quality itself.
The introduction and eventual global adoption of ISO 9000 was not an academic exercise or a bureaucratic flourish. It was a direct response to supplier fragmentation and the growing complexity of the systems being built. ISO 9000 gave manufacturers a common language – a way to insist on consistent processes and documentation across every company in the supply chain, no matter where they were located or how large they were.
This matters, because that standard did something subtle and powerful: it created a sorting mechanism. It made visible the capability gap between suppliers. Some met the bar. Some exceeded it. Many could not.
And once the capability gap was visible, consolidation followed almost automatically.
Those who could deliver consistent quality became the targets of mergers and acquisitions by investors with the vision to realize that they could create critical mass by amalgamating suppliers in order share high-level management and engineering talent. Eventually we ended up with the large component and system suppliers we all recognize today. They did not win because they were cheapest or flashiest. They won because they could provide enough structure and discipline to allow for both innovation and quality at scale. Eventually, the industry reorganized around them.
Automotive suppliers did not consolidate because bigger was better. They consolidated because consistency was mandatory and valuable
And scale was the only way to achieve it.
Aviation followed a similar path, but with its own tempo and pressures.
In the early decades of aircraft manufacturing, the big OEMs – names like Boeing, McDonnell Douglas, Airbus – built most things themselves. Engines were an exception, some kinds of avionics another, but much of the airframe and integration work stayed in-house. Aircraft were complex, but not yet unimaginably complex.
Then came the modern era: fly-by-wire systems, composites, global production lines, regulatory oversight that became both more exacting and more international. The cost and difficulty of designing and certifying a modern aircraft grew by orders of magnitude.
And with that complexity, the old model broke.
Large vertically integrated aircraft companies lost the ability to innovate aggressively enough to keep up with technology as it evolved. State-of-the-art expertise was required for engines, avionics, flight controls, composites, landing gear as each subsystem became a discipline unto itself. And the people who mastered those disciplines were often not the OEMs, but the suppliers who had invested decades into that one corner of the aircraft.
And globally, competition increased. It was no longer possible to sell an aircraft based on the name-brand value of the manufacturer. Aircraft operators, and regulators, demanded state of the art technology in everything from engines, to navigation to passenger entertainment systems
So, in order to stay competitive, the large OEMs grew increasingly large, complex and fragmented supply chains. By the early 2000s, aircraft programs were being built by layered, globalized supply chains with their own quality systems, documentation standards, and integration responsibilities. And, once again the cost of managing those supply chains started to become a competitive differentiator between the primes. As price became and increasingly important factor in making sales, increasing effort was applied to rationalising those supply chains to control costs.
The 787 Dreamliner is often criticized for how far it pushed that model, but the underlying logic was sound: only a handful of suppliers had the capability, scale, and experience to build certain subsystems reliably.
Again, consolidation did not happen because the OEMs wanted it. It happened because the physics and economics of high-quality and high-value demanded it. *As the OEMs began focusing on finding quality at scale while controlling costs the supplier landscape re-formed itself into something sustainable. So much so that now, it is widely acknowledged that much of the value in the aircraft industry is found at the Tier-1 supplier level rather than with the OEMs.
So why does that matter for the space sector today?
Well, I would argue that we are in midst of a similar transition. The “new space” movement effectively broke the vertically integrated models of the large legacy primes. The influx of new capital and new entrepreneurs led not only to an expansion of the sector but also to fragmentation.
We have dozens of companies building specialized components. Star trackers. Reaction wheels. Antennas. Optical payloads. Thermal systems. On orbit thrusters. On orbit edge computing hardware. Sensors of every kind. Power systems. Etc. etc. etc.
This has led to multiplying difficulties in creating and managing reliable top-to-bottom supply chains. And since one unreliable supplier can compromise the whole spacecraft the new companies that wanted to deploy specific technologies are finding themselves building whole platforms to host those technologies. They are all racing to demonstrate that they can own the entire stack even though they often have only a small fraction of the expertise and experience necessary to manage this feat.
Everyone is trying to do everything because they feel they have to. Fragmentation has grown to the point where managing the supply chain is beyond the capacity of new space companies. As fragmentation grows the industry is increasingly full of brilliant technology that struggles to scale. And reliability is uneven because process discipline is uneven. Documentation varies. Testing varies. Results vary. Making informed judgements on who to believe and how to manage the inevitable contingencies requires years – or even decades – of experience that the founders of new space companies don’t have and can’t afford to acquire.
So everyone who wants to demonstrate anything in space is encouraged to avoid the cost and risk of managing a supply chain by becoming vertically integrated and internalizing the “full-stack.” But that, too, is very likely beyond the capacity of most small and inexperienced companies although that lack of competence may not be obvious until it is too late.
And so, increasingly the sector is full of contradictions that are only going to get resolved the hard way – through some creative destruction. Many of the new vertically integrated companies will fail. As will many of the undercapitalized component suppliers who do not learn how to combine high-volume, low-cost and high reliability.
The irony is that I believe this situation was predictable. Because it is the pattern in other high-quality, high-value industries that have gone through similar transitions. So, how will we climb out of this hole. My firm bet is on consolidation. Gradually, the cream of the supplier crop will emerge and will be combined so that they can achieve the kind of critical mass that is needed to build the spacecraft and spacecraft systems reliably. These “tier-1” suppliers will then provide new space entrepreneurs with the “one-stop-shop” that they need to reliably source either the full spacecraft or the major component systems of spacecraft that are both reliable and cost-effective.
What is interesting – and what I think most people are not watching closely enough – is that the early signals of consolidation are already visible. But I think that will be the subject of the next column. Today, I am just going to leave it with the argument that the space industry is experiencing a pattern that has been seen before.
Some event triggers a sudden outburst of innovation, which leads to fragmentation, which leads to loss of reliability – especially at scale. This, in turn triggers a supply chain management crisis where the ability to manage the fragmented supply chain becomes a competitive differentiator. This causes the top tier of the industry to apply pressure that makes consolidation the only really viable survival mechanism for small suppliers.
There is nothing surprising here. The only surprising part is that we keep acting as though space will be different. The new space revolution is not ending. It is simply entering the phase that every high-value, high-reliability industry eventually reaches. It is going to look a lot different when it emerges on the other side.
If you want to know more about what that will look like, tune in next time!