Taking the initiative to extend an olive branch, SpaceX wants to collaborate with Apple

The previously stalled collaboration between Apple and SpaceX for satellite connectivity is now showing signs of returning to the negotiation table.

On October 23, The Information cited sources revealing that to prepare for a potential future agreement with Apple, SpaceX has recently added support for the radio frequency spectrum used by the existing satellite features of the Apple iPhone in its next-generation satellite design.

This move means that in the coming years, when Starlink's next-generation satellites are operational, they may be capable of providing satellite communication services to existing Apple devices.

Meanwhile, James Monroe, the chairman of Globalstar, Apple's current satellite service provider, has revealed intentions to sell the company for over $10 billion, while its current market value is only $5.3 billion.

The technological lag of Globalstar's network compared to Starlink in terms of speed and technology is prompting Apple to reconsider its collaboration options. Once a partnership with SpaceX is established, Apple consumers will be the biggest beneficiaries, as future iPhone devices are expected to achieve faster satellite connections through Starlink's next-generation satellites.

Technical Readiness

SpaceX has laid the technical groundwork for a potential collaboration with Apple.

According to The Information, the company has incorporated support for the spectrum used by Globalstar in its new satellite design. This technical adjustment enables Starlink to be compatible with existing iPhone devices without requiring significant hardware changes from Apple.

Starlink is currently the leading provider of satellite internet services, primarily serving customers through antennas installed on the roofs of homes or vehicles. The company recently launched its 10,000th Starlink satellite, accounting for over 60% of all active satellites in Earth's orbit.

SpaceX plans to significantly expand its service range by directly connecting ordinary smartphones to satellites, for which it has invested heavily.

Last month, the company reached an agreement to acquire EchoStar's wireless spectrum for $17 billion, which will help SpaceX provide faster internet services to mobile phones globally.

SpaceX President Gwynne Shotwell stated last month that the company is working with chip manufacturers to integrate Starlink connectivity features into mobile phones. The company has established partnerships with traditional telecom operators like T-Mobile to connect its satellites directly to mobile phones.

A History of "Grievances"

The previous attempts at collaboration between the two companies have not gone smoothly.

Earlier reports from The Information indicated that before Apple launched its first satellite feature in 2022, Musk had proposed that SpaceX become the exclusive satellite service provider for the iPhone for 18 months.

He suggested that Apple prepay $5 billion, and after the exclusivity period, pay an additional $1 billion annually. Apple rejected this proposal.

Additionally, Musk has publicly criticized Apple for the financial impact of its App Store fees on his social network X In August last year, Elon Musk's artificial intelligence startup xAI sued Apple for manipulating App Store rankings, harming its Grok chatbot, and favoring OpenAI's ChatGPT.

Nevertheless, both parties still have the motivation to reconcile. According to previous reports, some executives within Apple have long been skeptical about the partnership with Globalstar, believing that Apple should instead collaborate with SpaceX.

Globalstar's Predicament and Apple's Considerations

Compared to Starlink, the network of its current partner Globalstar is considered slower and relatively outdated in technology.

This limits the satellite features currently offered by Apple to sending emergency messages, sharing locations, and contacting roadside assistance in areas without cellular networks.

Globalstar appears to be struggling in the face of SpaceX's growing dominance and is highly dependent on Apple.

Over the past three years, Apple has invested approximately $2 billion in Globalstar. In its most recent quarterly financial report, Globalstar issued a warning regarding its most important customer, Apple:

Losing this customer could have a significant adverse impact on our financial condition, operating results, and cash flow.

Although Apple has heavily promoted the satellite connectivity feature in the iPhone, claiming it has potential life-saving safety advantages, the company has been cautious to avoid taking measures that could make it a telecom operator.

Reports indicate that Apple has yet to start charging consumers for satellite services, as it does not want to be regulated as an operator. Last month, Apple announced it would extend the free satellite service for iPhone users by another year, following a similar extension announced last year.

For the same reasons, Apple is unlikely to acquire Globalstar itself, despite having a right of first refusal.

Market Landscape and Future Outlook

If Apple collaborates with SpaceX, consumers purchasing new iPhones and other Apple devices in the coming years will undoubtedly be the biggest beneficiaries of the high-speed connectivity brought by the next generation of Starlink satellites.

The Information cited an insider revealing that Apple plans to add support for non-terrestrial 5G networks (including satellites) in new iPhones as early as next year. This would enable the iPhone to have full internet access via satellite, rather than being limited to a small set of messaging functions on the Globalstar network.

Of course, in the short term, the likelihood of SpaceX completely replacing terrestrial cellular network operators is low, as satellite connectivity only works well when users are outdoors and have an unobstructed view of the sky.

However, analysts point out that as Musk's company further consolidates its position by acquiring EchoStar's spectrum, it has become increasingly difficult for companies like Apple to bypass SpaceX. Tim Farrar, president of the satellite consulting firm Telecom, Media and Finance Associates, stated:

If Apple abandons its attempts to compete with SpaceX, then Starlink will solidify its dominance and become almost unchallenged in this market