Amazon challenges SpaceX as ambitions emerge, with Apple as a key variable

According to the Zhitong Finance APP, last Friday, reports emerged that American e-commerce and cloud computing giant Amazon (AMZN.US) is in negotiations to acquire satellite communication operator Globalstar (GSAT.US), aiming to significantly enhance its commercial internet satellite business to compete fiercely with SpaceX, the space exploration giant founded and led by Elon Musk. As a result, Globalstar's stock price surged over 20% last Friday.

It is noteworthy for global investors that, despite the attention this matter itself has garnered, there is a significant variable to consider, with a current market value of approximately $3.8 trillion. That is Apple Inc. (AAPL.US), a leading American consumer electronics company known for its popular products like the iPhone and iPad.

This iPhone smartphone brand manufacturer holds about 20% of Globalstar's shares, which means that any acquisition of Globalstar would require exclusive negotiations with Apple. Media reports indicate that after prolonged negotiations, parties associated with Globalstar are still discussing some complex issues related to the potential acquisition deal.

Acquiring Globalstar is a crucial foundation for Amazon's "clash of titans" with SpaceX in the commercial space sector.

Globalstar is essentially not a "regular satellite internet company," but a mobile satellite communication (MSS) operator: it operates low-earth orbit satellites and a global network of ground gateways, providing voice, data, asset tracking, and satellite IoT services to retail, enterprise, and government customers. Additionally, it possesses valuable spectrum assets, including Band 53/n53 in the United States and ground spectrum rights in multiple countries. Overall, Globalstar offers not just a "satellite system in the sky," but a complete infrastructure system of "satellite communication network + ground gateways + spectrum licenses + industry application scenarios."

Amazon urgently needs to acquire this satellite communication operator, not primarily because Globalstar is the largest in actual scale, but because it can save Amazon many years of detours. Amazon is negotiating to acquire Globalstar for approximately $9 billion, aiming to accelerate its low-earth orbit satellite business and directly compete with SpaceX's satellite communication service—Starlink.

For Amazon, what is most valuable is not a single asset, but the combination of three things: first, an existing low-earth orbit satellite communication network and global gateway infrastructure; second, scarce and commercially viable spectrum resources, especially Band 53/n53; third, the proven commercial satellite communication capabilities validated by Apple, government, and enterprise customers. This is equivalent to buying back "licenses, infrastructure, customers, and application scenarios" all at once, rather than starting from scratch and burning money to build.

The greatest advantage of SpaceX/Starlink is not just the large number of satellites, but the closed loop it has formed in terms of scale, users, channels, and application ecosystems. Starlink currently has over 9,500 satellites and more than 9 million users; while Amazon's Amazon Leo (formerly Project Kuiper) plans for about 3,200 satellites, it is still in the process of accelerating deployment and previously faced FCC timeline pressure due to progress issues Acquiring Globalstar cannot immediately bridge the gap in the number of broadband satellites between Amazon and Starlink, but it can quickly fill key shortcomings for Amazon in direct connection devices, private wireless, enterprise/government scenarios, and remote area connectivity in a very short time.

Therefore, Globalstar is crucial to Amazon's ambitions in commercial space, serving as a key "space map" for this cloud computing and e-commerce giant. However, it is definitely not a decisive move that can "independently defeat Starlink," but rather one of the core pieces that can accelerate the pace of catching up. Its most important strategic value lies in upgrading Amazon from "purely focusing on satellite broadband" to "satellite broadband + direct connection device systems + spectrum-driven hybrid connectivity platforms," significantly enhancing its position in the global commercial space industry chain and potentially accelerating its approach to the SpaceX level. However, there is a huge variable in this deal—Apple.

SpaceX is considering going public in June (around Musk's birthday), with a potential fundraising amount of up to $50 billion, which could become the largest IPO in history. The expected valuation could reach an astonishing $2 trillion, surpassing Tesla's current valuation of about $1.3 trillion. The "Musk Super Business Empire" formed by Tesla, SpaceX, and xAI may be the ultimate fate of these three companies founded by Musk.

Recently, as Musk has frequently released positive developments regarding space AI data centers, large-scale energy storage, artificial intelligence, full self-driving (FSD), Robotaxi, and the revolutionary "Optimus" humanoid robot, this world billionaire seems to be stringing together a "commercial space system + Starlink satellite communication + space AI computing power system/AI large model + energy/storage + electric vehicles + autonomous driving + robot manufacturing" into a financeable and clearly articulated "super vertical integrated asset chain," in order to amplify leverage in both the capital market and the industry side. Unifying the hottest global investment themes or narratives of "AI, communication, space, energy, and robotics" into a "full-stack super cutting-edge technology infrastructure platform" will undoubtedly have significant benefits for the pricing of the massive SpaceX IPO, boosting Tesla's valuation, mid-term IPO roadshows, and investor structure.

What would it mean for Apple if Amazon ultimately acquires Globalstar?

Apple previously obtained a stake in Globalstar through a $400 million equity investment and an $1.1 billion infrastructure payment, helping Globalstar build its satellite communication network.

It is understood that Apple uses Globalstar's satellites for the emergency SOS feature on the iPhone 14 series (and subsequent models) and related features on the Apple Watch. This feature allows users to quickly call and send text messages to emergency service agencies; it also notifies emergency contacts of the user's location via the user's cellular mobile network service. This feature was initially launched in the U.S. market and has since rapidly expanded globally. Although many iPhone users (and emergency responders) have praised this feature, Apple has yet to charge for the service. However, the company initially stated that it would start charging shortly thereafter Assuming the transaction between Amazon and Globalstar goes smoothly, Julia Ostian, a senior Wall Street analyst at the investment research platform Seeking Alpha, believes that Amazon may launch its own direct-connect wireless satellite communication service, possibly as an exclusive benefit for Prime subscribers.

"I personally expect that they will incorporate it into some service tier of the Amazon Prime subscription, or possibly integrate it with AWS and even Alexa to enable connectivity capabilities in remote areas," Ostian stated. "By leveraging its vast existing customer base, Amazon has a greater opportunity to compete fiercely with Starlink, continually eating into Starlink's market share—where the latter is already far ahead in user adoption and penetration rates."

Julian Lin, head of the "Best Of Breed Growth Stocks" portfolio, shares a similar view. "I fully expect Amazon to launch its own smartphone service, as this aligns with its obvious long-term goal—to dominate everything in the global consumer ecosystem," Lin said. "Of course, this could bring some complex issues, such as how this would affect the business relationship between Globalstar and Apple, but I don't think this will deter Amazon's endless ambition to dominate the global commercial space industry."

Michael Piccolo, a senior analyst at Wedbush Securities, noted that given Apple currently controls about 85% of Globalstar's existing satellite capacity, any transaction would require significant agreements on infrastructure sharing. Piccolo stated that this could lead to "an unusual dynamic cooperative relationship between two direct competitors."

The aforementioned analysts all indicated that for Apple's fundamental outlook, this could mean that the partnership between the iPhone brand owner and the e-commerce and cloud computing giant Amazon will further strengthen.

There has long been a partnership between Apple and Amazon, with both companies collaborating to sell Apple devices directly on Amazon's website without any third parties. Apple is also a long-term important customer of Amazon Web Services (AWS), leveraging the cloud service platform to support many of its own service systems, such as iCloud, Siri, and Apple Maps.

"I don't think Amazon will completely push Apple out to the point where Apple abandons this partnership," analyst Ostian stated. "I think it's more likely that they will allow Globalstar to continue operating as an independent entity in the long term, while retaining Apple as one of its important shareholders and major customers."