Deere,
the heavy-equiment powerhouse, and Elon Musk’s SpaceX have a deal that shows the future of both industries. What’s ahead, though, isn’t in the stars; it’s firmly rooted on Earth.
Deere
will use SpaceX’s Starlink Wi-Fi hardware and software to connect its machines to the internet in remote areas, The Wall Street Journal reported. The companies didn’t immediately respond to Barron’s requests for comment.
The deal makes sense.
Ag equipment needs the internet. Tractors and combines can drive themselves as well as vary the application rate of fertilizers, pesticides, and herbicides based on the soil.
The upshot for farmers is higher crop yields and lower costs. For Deere and its peers, all the investment in smart technology is aimed at improving profit margins.
And Starlink’s space-based Wi-Fi is the smart choice. It works best in rural areas, where cables, modems, and routers are hard to install and where tall buildings that interfere with signals just don’t exist.
More importantly, perhaps, Starlink is the largest provider of space-based internet by a mile.
SpaceX has more than 5,000 satellites orbiting the planet. At the end of last year, it had about 2.2 million subscribers—up from about a million in 2022. Today, some 900,000 subscribers are outside the U.S. Just a couple of months ago, Musk said Starlink was “cash-flow” break even.
Starlink has so many satellites because SpaceX dominates space launch. In 2023, the company had 98 launches, up roughly 60% year over year, and about 45% of all orbital space launches around the globe. Roughly 60% of its 2023 launches were carrying SpaceX satellites into low-earth orbit.
Besides Deere, airlines and cruise ships use Starlink. And Deere’s peers will have to connect their equipment to the internet, wherever it is on Earth.
There are other satellite companies and Wi-Fi providers, admittedly, but the premier provider is SpaceX.
In premarket trading Tuesday, Deere stock was down 0.3%; the
S&P 500
and
Dow Jones Industrial Average
futures were down 0.4% and 0.2%, respectively.
SpaceX, valued at some $175 billion, is privately held. Its shares don’t trade on public exchanges.
Write to Al Root at [email protected]
Read the full article here
