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The acquisition buys Amazon direct access to the heavily contested direct-to-device market where it is looking to establish lead, says Luke Pearce of CCS Insight
Mid-April, amid chatter of a potential takeover of Globalstar by SpaceX, Amazon dropped the bombshell announcement that it is acquiring the satellite company for a whopping $11.57B. The news left many in awe, sparking debates and wide-ranging theories the went from a potential Amazon re-entry into private 5G to intensifying competition with Starlink.
So now a couple of weeks later, we decided to revisit the frenzy and this time really try to unpack why Amazon’s move wasn’t as out-of-the-blue as it seems.
Although much less-known compared to Amazon or Apple, Globalstar is in fact “quite a big profile,” says Luke Pearce, principal analyst at CCS Insight. The company has been an established player in the low Earth orbit (LEO) space since 1991. In 2022, it had a breakout moment when it partnered with Apple to launch the latter’s emergency SOS feature on the iPhone 14.
“If you’ve got an iPhone and you can see the satellite icon pop up when you are without coverage, that’s actually the Globalstar constellation which is powering that feature,” says Pearce, speaking on Pulse this week.
So needless to say that by its connection with Apple, Globalstar is already an established player in the direct-to-device (D2D) space — the hot slice of the satellite market that every satellite network operator is obsessing over. “It’s really not a surprise that Globalstar was a target for a few different companies,” he says.
So placing a winning bid was a calculated move on Amazon’s part. Pearce explained why. First, the acquisition buys Amazon a strategic shortcut into the highly competitive D2D market. At the heart of this theory is the mobile satellite services (MSS) spectrum, a valuable asset that Globalstar owns. Specifically, Globalstar owns a portion of the S-Band MSS spectrum, known as band n53, which is licensed for 5G.
“There’s been a lot of interest in MSS spectrum; it has been around for quite a long time..20 to 30 years, and used by a lot of Satcom vendors. Its history is a reason that it is so attractive,” Pearce noted.
Another big reason why the MSS spectrum is so highly coveted is because it does not interfere with terrestrial networks. It is globally harmonised and approved by regulators, and is a capable spectrum for enabling D2D services.
Additionally, Pearce pointed out that Apple’s executives have pledged to support Amazon in its entry into the D2D space. That, he said, gives Amazon a reference customer base for its next-generation D2D service launching in 2028. iPhones will also most likely support Leo’s new constellation.
“That gives [Amazon] a real leg up in the market with the dominance of the iPhone in many countries around the world. Perhaps, SpaceX’s Starlink or some of the other players may not have that immediate impact in terms of getting devices in people’s hands,” Pearce said.
So to put it plainly, Amazon didn’t just spend $11B on acquiring a minor satellite player; it swooped in and seized the prize. Whether that’d afford it the ability to level-set with Starlink is not clear yet — or maybe not even the right question to ask because it’s apples to oranges. Starlink is miles ahead in the game with over 10,000 satellites in orbit, while Amazon Leo only just crossed 300.
So Globalstar’s acquisition may not magically compress years of groundwork with one clever move, but the combination of spectrum, infrastructure, and high-profile customers that it brings goes a long way in explaining why Amazon has stepped in and what its strategic intent is.
