Massachusetts Institute of Technology Unit 1 “ Technical Success and Economic Failure ”

This systems study takes us back to 1987, when the idea of global satellite constellations providing personal mobile communications was first conceived. We will retrace the history of Iridium and Globalstar from 1987 to 2002 and discuss the technological and business context of both systems. The technical case presents the underlying multiple access technologies and the advantages and challenges of operating satellites in low Earth orbit rather than in the more common geosynchronous belt. The business case involves estimating lifecycle cost, forecasting demand and quantifying a pricing strategy. The enthusiasm and telecomm boom in the 1990’s fueled the development of new technologies and architectures and led to billions of dollars of investment. Satellite bulk manufacturing, intersatellite links, and constellation management were all impressive firsts achieved during this time. Unfortunately, the subscriber market forecasts turned out to be overly optimistic and both systems, Iridium and Globalstar, ended up in bankruptcy. Two assignments are included in this unit. The first is a brief role play during class, where various stakeholder groups are asked to negotiate post-bankruptcy scenarios. The second assignment is an individual problem set. The fundamental questions addressed by this unit are: (1) "How can it be that these complex engineering systems were so successful technically, but ultimately ended up as business failures?” (2) “What can we learn from this experience for architecting and designing future engineering systems?”