When your company is the only player in town chance is that your company will not try to innovate their business practice, try to have better quality products at lower cost. Why would you worry about those things if your business model is "Cost Plus" and you are only player in town ?
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The big kahuna of American rocket companies is the United Launch Alliance, a joint venture of Boeing and Lockheed Martin that until this year held a monopoly on the lucrative business of launching rockets for the US Air Force.
But that monopoly is no more. The company faces a new era of competition as Elon Musk’s maturing SpaceX aims to fly more space missions in one year than ULA does, and as Jeff Bezos’ Blue Origin breaks ground on a new factory for orbital rockets.
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When Elon Musk founded SpaceX, he brought two key virtues that had been missing in aerospace: A Silicon Valley style of leanness amid all the cushy government contract margins, and a visionary belief that investments in reusable rockets would be justified by a wave of space businesses involving customers beyond traditional government clients.
ULA is learning from both ideas. Bruno has responded to the competitive challenge with better blocking and tackling—”we’ve taken about 36% percent of the costs out of our supply chain”—and a vision, rivaling Musk’s in its ambition, of a growing economy between the Earth and the moon.
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Key to all of this is making it cheaper to actually get to space. As of 2015, SpaceX was able to cut the retail cost of its rockets to less than $100 million—as low as $62 million for certain commercial launches—while the cheapest ULA rocket costs $164 million to fly. Those numbers alone explain how SpaceX shook up the market, though ULA notes that the upstart can’t match its 100% record for reliability.
Either way, ULA is building a whole new launch system, called Vulcan, to compete.
http://qz.com/766697/spacexs-biggest-riv...&yptr=yahoo
ULA didn't do anything for more than a decade while they were the sole contractor to launch rockets for the US Air Force. Only when Space-X had a contract to launch a satellite for US Air Force few months ago then ULA starts to cut cost and tries to innovate their business.
It is very similar to other monopoly industries. Example, a town with only 1 cable TV company the cost is usually very high with lousy customer service, but when that town allows another cable company to provide service, suddenly the old cable company had a much lower cost with more channels and a much better customer service.
Most government contractors (specially defense contractors) are operated with "Cost Plus" contract, whatever the cost is plus a percentage of profit government just paid the bill no question asked.
Another type of monopoly is utility companies. You have only 1 company provides these services: Water, gas, electricity ... Whatever they charge you just pay, the only thing you can do to lower your bills is using less, but sometimes using less doesn't mean lower bill. We use less water(about 20-25% less) because of severe drought the last 5 years, but our bills went up a little. Water service charge went up by 30-40%, sewer service charge went up by similar percentage and water rate went up by 15-20%.
I hate monopoly.
Quote:
The big kahuna of American rocket companies is the United Launch Alliance, a joint venture of Boeing and Lockheed Martin that until this year held a monopoly on the lucrative business of launching rockets for the US Air Force.
But that monopoly is no more. The company faces a new era of competition as Elon Musk’s maturing SpaceX aims to fly more space missions in one year than ULA does, and as Jeff Bezos’ Blue Origin breaks ground on a new factory for orbital rockets.
Quote:
When Elon Musk founded SpaceX, he brought two key virtues that had been missing in aerospace: A Silicon Valley style of leanness amid all the cushy government contract margins, and a visionary belief that investments in reusable rockets would be justified by a wave of space businesses involving customers beyond traditional government clients.
ULA is learning from both ideas. Bruno has responded to the competitive challenge with better blocking and tackling—”we’ve taken about 36% percent of the costs out of our supply chain”—and a vision, rivaling Musk’s in its ambition, of a growing economy between the Earth and the moon.
Quote:
Key to all of this is making it cheaper to actually get to space. As of 2015, SpaceX was able to cut the retail cost of its rockets to less than $100 million—as low as $62 million for certain commercial launches—while the cheapest ULA rocket costs $164 million to fly. Those numbers alone explain how SpaceX shook up the market, though ULA notes that the upstart can’t match its 100% record for reliability.
Either way, ULA is building a whole new launch system, called Vulcan, to compete.
http://qz.com/766697/spacexs-biggest-riv...&yptr=yahoo
ULA didn't do anything for more than a decade while they were the sole contractor to launch rockets for the US Air Force. Only when Space-X had a contract to launch a satellite for US Air Force few months ago then ULA starts to cut cost and tries to innovate their business.
It is very similar to other monopoly industries. Example, a town with only 1 cable TV company the cost is usually very high with lousy customer service, but when that town allows another cable company to provide service, suddenly the old cable company had a much lower cost with more channels and a much better customer service.
Most government contractors (specially defense contractors) are operated with "Cost Plus" contract, whatever the cost is plus a percentage of profit government just paid the bill no question asked.
Another type of monopoly is utility companies. You have only 1 company provides these services: Water, gas, electricity ... Whatever they charge you just pay, the only thing you can do to lower your bills is using less, but sometimes using less doesn't mean lower bill. We use less water(about 20-25% less) because of severe drought the last 5 years, but our bills went up a little. Water service charge went up by 30-40%, sewer service charge went up by similar percentage and water rate went up by 15-20%.
I hate monopoly.
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