The SoftBank CEO isn’t the only one who has questions about Elon Musk’s orbital data center hype

Not everyone buys Elon Musk’s vision for orbital data centers.

Masayoshi Son, the founder and CEO of Softbank, said at a recent shareholder meeting that building data centers in space will not do much to reduce costs and will take so long that “in the battle for AI, the next few years will be more important than it will be ten years or more from now.”

On a recent episode of TechCrunch’s Equity podcast, Kirsten Korosec, Sean O’Kane, and I discussed Son’s words as part of a broader conversation that included OpenAI’s plans for custom chips, Groq’s new $650 million funding, and more.

Kirsten noted that it’s “very ironic” that Son is playing an outsider here, given SoftBank’s “long history of wild bets.”

Sean, on the other hand, said that when Musk talked about “creating a constellation – satellites that need to be replaced every few years – to create an ‘orbital data center,'” he was simply “guaranteeing that extra business” for SpaceX.

Read on for a preview of our interview, edited for length and clarity.

Sean O’Kane: Listen, neo-clouds are the new fuel, and everyone who wants to make money is chasing the new cloud. I’m proud to announce that TechCrunch is now neo-cloud, give us all your money.

I mean, this is what you do. It seems that there are many forced players, so anyone who has the opportunity to be able to rent that computer takes it, whether Groq, the company that was released by Nvidia, or Allbirds, which went bankrupt and came out as a new provider of neo-cloud instead of selling shoes – Tim Fernhol will recommend a new effort. learn.

Even if you’re SpaceX, where your vision was: I’m going to build an AI platform that will have an addressable market equal to the US GDP, but before we get there, we’ll just rent our computer. And we’ve seen this continue to happen with SpaceX, where it’s not as big as the deals they got with Google or Anthropic, but they just signed another deal, [their] the first post IPO, hiring accounts for another small player. They continued down that road.

You know, I see this is Groq’s business in the near term. The question with all of this is how long it lasts in the long run.

Anthony Ha: When we talk about SpaceX and their AI and data center business, we should also talk about this comment Masayoshi Son, CEO of SoftBank, made recently, where he basically said: What is the point of data centers in space? Which is the question we asked in this program.

And it speaks, again, to this idea in the industry of being really, really pressing – they need to build as many data centers as possible, [and] there are all kinds of reasons why that would be a challenge here on Earth, so maybe space is the answer. But I think that Son brings up very good points about: All these things that we are talking about, even if they all work – and the costs will be very serious for them to work – this does not happen for years and years and years, so this is not a solution to any immediate problem, as far as the need for data centers goes.

Kirsten Korosec: I just want to point out that SoftBank has a long history of wild bets. I think it means something when the Son comes up and asks a question that has been asked by many people.

I mean, there are a lot of VCs and founders [who] have drifted into the idea of ​​orbital data centers and it seems that everyone is suddenly on board. Just a few years ago, I think, if someone had said that, it would have been slapped around a little bit. So I think it’s an important part of the process that someone with a very good profile asks that question. But that is very confusing to me he you’re the one asking, because if you look at his pitch deck, they threw a lot of money at bold ideas.

Sean: We are working! Listen, we’re going to be saying this for a long time over the next few years. The idea of ​​putting these things into space would be an interesting engineering challenge and certainly an interesting economic challenge.

Anthony, what you said is certainly correct to some extent. Elon Musk is someone who hates red tape and you know, there are no NIMBYs in space so he’s going to try to do that.

For me, it comes down to: The business as it stands now for SpaceX, especially its launch business, is very dependent on Starlink. The reason they’re 80 or 90% of the global launch market isn’t just because they do all these things better than all the other launch providers around the world, it’s because they have Starlink increasing that number. If you take Starlink out of the equation, it’s going to be close to – I don’t know, maybe 20% or 30% of the launch market, or 40%, but certainly not 90%.

And when you talk about making a constellation of satellites – satellites that need to be replaced every few years – to create an “orbital data center,” unquote, you’re just guaranteeing that much business for your startup business. And I just can’t help but come back to that point.

Kirsten: I want to say that right away [SpaceX’s] some big businesses rent out their computer, by the way. So back to the chip discussion. We have come full circle.

Anthony: One of the themes that may continue in this episode is the idea of ​​talking about your book. This is not a new phenomenon. Managers in technology companies, or any other company, what they predict about the future is ultimately the future that will be useful for their business.

But I think it’s something that should always be remembered when we have discussions about big AI companies, because this is a time of incredible uncertainty, and we’re all asking ourselves: What does the job market look like in the future? What effect will this have on the environment? What skills should I learn?

All these AI CEOs or AI investors, they all have thoughts about that. And it is not that they are wrong or deliberately misleading, but in each case, there is an asterisk in these predictions. In Musk’s case, he’s talking about something that could be very good for SpaceX’s business. In the case of SoftBank, they are very, very invested in data center projects here on Earth. Sam Altman is another notable person who has turned his sights on the idea of ​​an orbital data center – and again, he and Elon Musk apparently have a long and complicated history together.

All of which means there are no objective, unbiased observers here. It’s all these people with lots of baggage and money at stake.