Northern Sky Research

Inmarsat Moves Down the Value Chain… Again

Dec 18th, 2013 by Brad Grady   More from this Analyst | Profile

In the wake of Inmarsat’s successful launch of its first Global Xpress satellite on December 8th, it has now announced the acquisition of maritime service provider Globe Wireless.  Expanding upon the 2011 acquisition of ShipEquip, Globe Wireless will help Inmarsat continue to ramp-up the installation of XpressLink terminals on vessels, and enable value-added resellers to quickly and easily expand into offering Global Xpress-based products and services.  Leveraging the existing network of Inmarsat L-band service providers and airtime resellers, a complete ‘ship-to-satellite’ offering from Inmarsat further reduces the barriers to entry for these partners to offer GX solutions.

More than just another 6,000 vessels and $91M in revenues for Inmarsat, the Globe Wireless acquisition puts Inmarsat in a position to offer a 'turn-key' package to service providers and value-added resellers for Global Xpress.  Globe Wireless' network of service, support, and installation locations as well as an existing remote hardware infrastructure further increases Inmarsat's ability to ramp-up GX adoption in the critical first few years of service… and move into providing more than just a pipe, but a platform for other value-added service providers to build upon.  By leveraging the existing iFusion product, Inmarsat now has access to a common remote infrastructure for service-oriented partners to offer products into the maritime market.  With continuing pressure on bandwidth and service costs, these value-added services will be a key component for not only driving overall bandwidth revenues, but additional revenue streams for service providers within the maritime market.  As Inmarsat states in the press release, the acquisition will, "remove the need for partners to invest the time, funds and other resources into duplicative R&D."  Or simply, ‘we'll provide the hardware, you provide the applications’.

However a key question remains, is there a significant market for a maritime-centric application store?  As enterprises seem to have mixed feelings towards application stores, one does have to question if the model can be applied to the enterprise-centric maritime market. Quite simply, if the hardware is standardized and the connectivity is commoditized, where does that leave maritime service providers?  Just as GEO-HTS based services aim to revolutionize the amount of bandwidth available to the maritime market, does the Globe Wireless acquisition signal another revolution within the service provider model?

Only time will truly tell, but one of Inmarsat's biggest rivals, KVH, has already moved down a similar path with the acquisition of the CommBox product for remote infrastructure, and the Headland Media group for the 'applications.'  With a combination of remote infrastructure, and value-added services, KVH continues to expand, most recently with a contract to provide services to the BW LNG/LPG tanker fleet.  Yet, the maritime market remains extremely complex, with a diverse set of price-sensitivities, in-house technical expertise, and end-user requirements. 

The core market for Inmarsat’s Global Xpress offering – the merchant maritime market – will likely be one of those markets where a ‘turn-key’ model can see success for service providers.  With almost half a billion dollars in just service revenues projected for GEO-HTS enabled services to merchant maritime vessels over the next ten years according to NSR’s Maritime Satellite Markets report, application-centric revenue streams will only increase that figure.  Crew welfare applications, vessel management, and operational support will all be key enablers of these application-centric revenue streams, as well as drivers for more bandwidth and service revenues.

Bottom Line

As Inmarsat continues to move down the value chain, it continues to move the market to a point where for the majority of maritime end-users the equipment and connectivity matter less than the applications and services it enable.  More so than ever before, service providers will need to continue to focus on providing the right hardware, bandwidth, and software to suite the needs of their customers – from both off-the-shelf and customized offerings.

Information for this article was extracted from NSR's report: Maritime Satellite Markets