Not everyone is buying Elon Musk’s vision for orbital data centers.
Masayoshi Son, founder and CEO of Softbank, argued at a recent shareholder meeting that if “the next few years will be much more important in the battle for AI than what will happen 10 years from now,” then building data centers in space won’t help much with reducing costs and would take too long.
In the latest episode of TechCrunch’s Equity podcast, Kirsten Korosec, Sean O’Kane and I discussed Son’s comments as part of a broader discussion that included OpenAI’s plans for custom chips, chipmaker Groq’s new $650 million funding round, and more.
Kirsten noted that it was “very ironic” that Son would take a skeptical stance here, given SoftBank’s “long history of gambling.”
Meanwhile, Sean said that when Musk talks about “creating a constellation of satellites that need to be replaced every few years to form an ‘orbital data center,'” he’s only “ensuring that much more business” for SpaceX.
Continue reading for a preview of our conversation, edited for length and clarity.
Sean O’Kane: Listen, neocloud is the new oil, and everyone who wants to make money is turning to neocloud. We’re proud to announce that TechCrunch is now a neocloud. Please donate all your money to us.
I mean, this is what you do. There seem to be so many compute-constrained players that anyone who has the opportunity to rent that compute is taking it. Whether it’s Groq, a company half-emptied by Nvidia, or Allbirds, which emerged as a new neo-cloud provider instead of going bankrupt and selling its shoes. Tim Fernholz interviewed the new CEO of the new endeavor, which I would definitely recommend people read.
Or maybe you’re SpaceX, your idea is to build an AI platform that can address a market the size of the GDP of the United States. But before we get there, we’re going to lease compute. And we’ve seen this happen over and over again with SpaceX. Although not as large as the deals they signed with Google or Anthropic, they signed another deal to lease compute to other smaller players – (their) first post-IPO deal. They continue along that path.
You know, I think this is going to be Groq’s business in the near term. The question with all of this is how durable it is in the long run.
Anthony Ha: If we talk about SpaceX and its AI business and data center business, we should also talk about the recent remarks made by SoftBank CEO Masayoshi Son. He basically said: What is the point of a data center in space? This is the question we asked in this broadcast.
And this again means that the calculations in the industry are very limited. We need to build as many data centers as possible (and) there are all kinds of reasons why this is proving difficult here on Earth, so maybe space is the answer. But I think Son makes a pretty fair point: Even if all of these things that we’re talking about work — and the costs to make them work will be very serious — this won’t happen for years and years and years, so as far as the current need for data centers goes, this is not a solution to the immediate problem.
Kirsten Korosek: I’d like to point out that SoftBank has a long history of making tough bets. When Son Heung-min appears and asks a question that many people have asked, I think it says something.
I mean, there are a lot of VCs and founders who are excited about the idea of orbital data centers, and suddenly it seems like everyone is on board. Just a few years ago, if someone had said something like that, I think they would have gotten a bit of a slap in the face. So I think having someone with a pretty high profile asking that question is an important part of the process. But that’s so ironic that Because if you look at his pitch deck, he invested a lot of money into some pretty bold ideas.
Sean: WeWork! Listen, we’re going to be saying this a lot over the next few years. The idea of placing these things in space would be an interesting engineering challenge and certainly an interesting economic challenge.
Anthony, what you said is somewhat correct. Elon Musk is a man who hates bureaucracy and there are no NIMBYs in space, so of course he will try to do so.
To me, it boils down to this: SpaceX’s current business, especially its launch business, is overwhelmingly dependent on Starlink. The reason they have 80-90% of the global launch market isn’t just because they’ve done everything better than almost every other launch provider in the world, it’s also because they have Starlink growing their numbers. If you take Starlink out of the equation, it would be closer to 20% or 30% or 40% of the launch market. But definitely not 90%.
And when you talk about building multiple satellites (satellites that need to be replaced every few years) to form an “orbital data center,” it only guarantees a lot more business for the launch business. And I can’t stop myself from going back to that point.
Kirsten: But I just want to say really quickly that another large company (at SpaceX) is leasing computers. Now let’s go back to the chip story. We have come full circle.
Anthony: One of the other topics that could run through this episode is the idea of talking about your own book. This is not a new phenomenon. What executives at technology or other companies predict about the future is a future that will ultimately benefit their business.
But I think this is something that’s always worth remembering when having conversations about big AI companies. Because this is a moment of great uncertainty and we are all wondering. What will the job market of the future look like? What impact will this have on the environment? What skills should I learn?
Every AI CEO or AI investor has that thought. And I’m not saying they’re wrong or intentionally misleading, but in each case these predictions come with an asterisk. As for Musk, he’s talking about something that will be very good for SpaceX’s business. As for SoftBank, they’re investing very heavily in data center projects here on Earth. Sam Altman is another notable figure who rolled his eyes at the idea of orbital data centers. And again, he and Elon Musk clearly have a long and complicated history together.
All this means that there is no objective, impartial observer here. All these people have baggage and huge amounts of money at stake.
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