Founder of Amazon as well as space company Blue Origin, Jeff Bezos, speaks about the future of commercial space travel. Brent Lewis | Denver Post | Getty Images

Amazon's plan to launch thousands of internet satellites to connect billions of people around the world represents a serious and underappreciated entrant in the space business, multiple analysts and industry executives told CNBC. Jeff Bezos' company is working on Project Kuiper, which would put 3,236 satellites into orbit to provide high-speed internet to any point on the globe. While Amazon has not indicated the timeline or cost to fully deploy the network, the initial proposal is similar to at least four other companies building and launching high-speed internet satellites, especially that of Elon Musk's SpaceX. "Global internet is a huge opportunity, especially for someone like Amazon with cloud services," ARK Invest analyst Sam Korus told CNBC.

Amazon's satellite plan rolled out quietly by the company this week could be revolutionary, industry executives say. More than a dozen space industry executives spoke to CNBC about Amazon's proposal under condition of anonymity, due to either partnerships or competition with Bezos' space ventures. These executives have experience across the entire supply chain of the space business – from building rockets to operating satellites and everything in between.

"We've known for a long time that there is a significant portion of the population that's unconnected," Chad Anderson, CEO of venture capital firm Space Angels, told CNBC. "Already, there's been a lot of value in connecting these people to the global economy." Marketing for internet satellites from the incumbent players, such as SpaceX with its "Starlink" network and SoftBank-backed OneWeb, has largely centered around the opportunity of connecting rural networks. Amazon is no different in that regard. The company said in a statement that it also wants to provide "connectivity to unserved and underserved communities around the world." But the business case for Bezos' network is much broader, according to Korus and Anderson. "If you get everyone access to the internet then you've just doubled your total addressable market for e-commerce, cloud, internet and any other business Amazon wants to do," Korus said. "You can see the clear profit motive here for Amazon: 4 billion new customers," Anderson added. Two industry officials said that this move "validates the market model" for these immense internet satellite networks, especially since "Amazon is a publicly traded company" with a broader shareholder base, unlike other space companies. Additionally, Amazon's entrance "makes an already challenging market even more competitive," one executive said. These networks have high capital costs as well as complex technological challenges – the recently completed Iridium constellation cost about $3 billion to build and launch over the course of a decade. "This is likely just the beginning of a marathon of change coming" to the space industry, another official said.

Customers

The move from the e-commerce company surprised some because it's "coming from Amazon and not Blue Origin, Bezos' pet space project," Korus said. While privately held Blue Origin is also wholly owned by Bezos, he holds only about 12 percent of Amazon's shares. This means that unlike Blue Origin, which has been allowed to progress more steadily, the satellite venture being built by Amazon is beholden to show results for public shareholders.



But Korus doesn't think that will be an issue for Amazon, which has already partnered with Iridium to use satellites for an Amazon Web Services network for internet of things applications. "You've got the growth potential for AWS ... and only half the world is connected to the internet," Korus said. "More accessible, reliable, fast and low-latency connectivity will catalyze the birth of new interactive media, gaming, and e-commerce companies and products otherwise not available to any but the most developed metro areas," Shahin Farshchi, space investor and partner at Lux Capital, told CNBC. Two industry executives thought Amazon's reach – sometimes called "the Amazon effect" – was an additional factor. This makes a satellite network "just another part of their logistics business," one official said. "People do everything on Amazon these days," one of the executives added. Bezos has many of the elements in place already to make this network a reality. For example, one of the challenges is ground infrastructure. In November, Amazon announced AWS Ground Station, a new business unit that will build 12 satellites facilities around the world to provide the vital link needed to transmit data to and from satellites in orbit. "AWS Ground Station means having that infrastructure in place and that is key," Anderson said.

Telesat has selected our powerful New Glenn rocket to launch Telesat's innovative LEO satellite constellation into space. Telesat

Additionally, while Blue Origin is technically a separate company, there is little doubt Bezos' rockets will launch most, if not all, of Amazon's satellites. With Blue Origin less than two years away from the debut of its massive New Glenn rocket, launching hosts of small satellites would help demonstrate Blue Origin's capabilities while also reducing one of the many costs of Amazon's networks. Or, as one industry official put it, there's "no better way to prove to your potential customers that you know what you're doing than launching your own satellite network." Given the cacophony of undertakings, another executive said the "biggest takeaway is the extraordinary ambitions Bezos has for Amazon."

Competitors

"It's not a coincidence that you see all of these companies that are suddenly targeting this opportunity," Korus said. OneWeb, SpaceX, Telesat, Boeing and now Amazon are the major players developing internet networks with hundreds or thousands of satellites.The race to space for broadband networks is "today's gold rush," an executive said – and its one that is being watched closely. "There will definitely be a winnowing of players, but I wouldn't bet against Bezos," the executive added. His track record with the Amazon empire is universally revered, executives said. And "if I'm one of the other players, like a Starlink or a OneWeb, my radar just went off like crazy," one person said. The opportunity is narrowing to stay ahead of Bezos. "He basically comes in, under prices everyone, owns the market and then raises prices," Anderson said. "There's no reason to believe this will be different." Before Amazon's announcement, Anderson believed Starlink was the stand out among the stable of satellite internet constellations. "They were definitely the front-runner," Anderson said. But now Amazon has arrived, showing that others are "starting to understand what Musk is doing and realize the value behind it," space investor Francois Chopard said. SpaceX was the first to launch test satellites among the five companies but Musk's company is still facing several key challenges. One executive speculated that SpaceX may struggle to raise the capital it needs for Starlink due to the company's diverse and simultaneous undertakings. Another executive pointed out that much of SpaceX's satellite workforce is based in Seattle, Washington — the backyard of Bezos. Amazon will "be able to hire a lot of the Starlink engineers," the executive said. An industry official highlighted that Amazon's ability "to bundle internet access with other offerings is arguably more meaningful" than a standalone internet broadband network, the person said. The latter is not a new idea, as many within the space industry have theorized and even attempted building a network like this in the last few decades. "The payoff for risk-reward is there," Korus said, before adding that "people have thought this before and failed." Amazon's profit motive is clear and it's not the only one of the so-called "FANG" companies, namely "Google and the other being Facebook," Anderson said. All but Netflix have now theorized about internet service from above, but those efforts either "haven't been successful or are on hold," Anderson added. When thinking about what this means for the other FANG players, one executive said they "expect two more mega-constellations to pop out of nowhere in the next year or two." While the person declined to specify the additional companies working on internet satellites, they did note that these other constellations would be "closer to Amazon's play," in terms of application.

Jeff Bezos and Elon Musk Getty Images

Whether or not Musk's network will directly compete with Bezos' for market share is unclear at this point, as several executives noted that Bezos focuses much more on opportunities than the competition. "I don't know that it's him vs. him," Anderson said. "They're both in a position to take advantage of it." Given their overlapping space interests, this could easily be the next head-to-head competition between Musk and Bezos. They both have developed reusable rockets, as well as capsules to launch humans to space, although Musk is much farther than Bezos. "Is Bezos trying to go Mars? At least not yet," Korus said. "Maybe the cliffhanger is that in four years Bezos is going to announce a plan to go to Mars."

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