Analysts believe SpaceX is greatly subsidizing the Starlink starter kit cost

SpaceX’s Starlink has been in the news quite a bit lately. Beta users of the service have finally gotten their hands on the starter kits and have been able to test them in the real world. But the one thing that has stood out the most seems to be the cost of the starter kit.

Currently, Starlink’s starter kit’s cost is $499, definitely not cheap to gain access to the internet. That cost motivated two satellite-communications industry consultants to look into what it likely costs SpaceX to manufacture the starter kits.

The two consultants told Business Insider that they weren’t the least bit surprised with SpaceX’s struggle to get the cost of these kits down. In fact, they claimed that SpaceX is likely subsidizing the cost to users by $1,000 to $2,000 per kit. They also said that SpaceX would need “tens of thousands of customers before you got those subsidies down to $1,000 or less.” Elon Musk has also stated that reducing the cost of the starter kits has proven very difficult.

According to the same consultants, going out and purchasing a similar phased array component to the one included in the Starlink kit would cost the average user tens of thousands of dollars. So, while $499 may seem like a hard price to swallow, users are really getting a deep discount for the hardware. “It’s like taking … a really state-of-the-art computer, and then connecting it to a very sophisticated array of electronics,” one of the consultants told Business Insider.

While most companies wouldn’t be capable of selling enough of these kits at such a subsidized price and managing to break even, Elon Musk may be the man who pulls it off. The two analysts echoed this same concern regarding Elon’s business model with the kits, but they also said, “Elon Musk has the determination to make things happen. He might succeed.”

Via Business Insider