Nanosats take off, but they don't take over

Executive summary

Deloitte predicts that by the end of 2015 over 500 nanosatellites (nanosats) will be in orbit. Nanosats have a mass of between one and ten kilograms, compared to hundreds or even thousands of kilograms for the average commercial satellite. They also tend to be sized in increments of ten centimeters, with a 30 cm x 10 cm x 10 cm configuration being the most common, whereas most commercial satellites are at least one meter or more in every dimension.

Before November 2013, only 75 nanosats had ever been launched; another 94 were put in orbit in the three months ending January 2014, for a total of nearly 170. Thus, our prediction represents a nearly 300 percent increase in the installed base.

Nanosats are attractive for many reasons: they are cheaper than conventional satellites, lighter, easier to build and test, easier to launch, and (following Moore’s Law) increasingly capable of more complex computational tasks. Students of technology history may wonder whether this is another case of innovative disruption. Although nanosats are currently much less capable than traditional satellites, will they follow a similar path to personal computers and camera phones ̶ come in at the low-end, keep improving and eventually dominate the market? Deloitte predicts the answer is probably “no”.

Over 90 percent of the commercial services currently delivered by satellites (of any size) require certain fundamental characteristics that nanosats struggle with due to physical limitations: the ability to stay in the correct orbital position; the ability to transmit enough power back down to Earth that even small receivers will find usable; and the ability to sense relatively small features.

Nanosats are an important innovation in satellite technology. Their low cost and flexible design will likely make possible many kinds of scientific experiments, as well as earth imaging at more frequent capture rates but lower resolutions. For example, tracking ships at sea requires neither particularly large sensors nor high power transmission: another ideal market for nanosats. But if we look at the $200 billion existing satellite market, roughly 80 percent is almost certainly not addressable by any space-based device smaller than ten kilograms – either today, or even by 2025.