Amazon.com, Inc. (AMZN.US) purchased Globalstar, Inc. (GSAT.US) for $11.6 billion, and the biggest winner turned out to be Apple Inc. (AAPL.US)?

The acquisition of Globalstar, Inc. (GSAT.US) by Amazon.com, Inc. (AMZN.US) could ultimately benefit one of its biggest competitors in the hardware devices field - Apple Inc. (AAPL.US). The $11.6 billion deal announced on Tuesday will provide Amazon.com, Inc. with a satellite network, accelerating its efforts to provide internet services directly to devices. The e-commerce giant also pledged to use its Leo satellite system to support Apple Inc.'s emergency text messaging service, filling the role currently held by Globalstar, Inc. If the deal goes through, Apple Inc. will gain a well-funded and ambitious partner in the satellite communications field. This will help the iPhone maker expand its services in an increasingly important market. Apple Inc. issued a rare statement in support of the external tech deal, citing a "good history of cooperation" between its infrastructure services (including the e-commerce giant's cloud computing services) and Amazon.com, Inc. Greg Joswiak, Apple Inc.'s marketing director, stated, "We look forward to further deepening our cooperation on Amazon.com, Inc.'s Leo platform. This will ensure that our users can continue to use key satellite functions they have come to rely on." Apple Inc. has been working on its satellite capabilities for years, but lags behind other companies in the industry. In 2022, the iPhone maker launched a series of satellite-based services, allowing for offline text messaging in areas without cellular coverage and emergency call assistance. To achieve this, Apple Inc. partnered with the 35-year-old Low Earth Orbit satellite operator Globalstar, Inc., investing in and holding around 20% of the company's shares. While Apple Inc. was an early mover in consumer-facing satellite services, the industry landscape has quickly changed. Elon Musk's SpaceX has taken a dominant position in satellite-based internet services, offering faster speeds, wider coverage, and the ability to support voice and data beyond what Globalstar, Inc. can provide. SpaceX has also partnered with the second largest U.S. wireless carrier, T-Mobile US Inc. (TMUS.US), making it easier for devices such as iPhones to connect to its network without relying solely on Apple Inc.'s capabilities. Other major carriers, such as AT&T Inc. (T.US) and Verizon Communications Inc. (VZ.US), have also introduced their own satellite services, providing more options for iPhone users. This poses a significant question for Apple Inc.: what is the purpose of operating its own satellite network when better options that require less maintenance are emerging? Amazon.com, Inc., with its resources and ambition to make the Leo satellite service a major competitor to SpaceX's Starlink, is changing this dynamic. Now, Apple Inc. no longer needs to subsidize Globalstar, Inc., and can instead access an expanding satellite constellation to better compete with its own satellite services. Roger Entner, analyst at Recon Analytics, stated that Apple Inc. wants to collaborate with "a well-known and financially strong player that is not SpaceX." He noted that Amazon.com, Inc.'s seriousness about the satellite business had been questioned in the past, but now they are investing significant funds, indicating their commitment. Of course, the satellite industry is rife with uncertainty, and Amazon.com, Inc. is known for adjusting its product strategies. Apple Inc. may ultimately decide that maintaining its in-house satellite capabilities is not worth it. Additionally, Apple Inc. and Amazon.com, Inc. are competitors in multiple markets, including digital assistants, smart home technology, and even TV streaming services. However, for now, both tech giants are actively working to capture a larger share of the satellite market. Amazon.com, Inc. announced on Tuesday its plans to launch a device-to-satellite network in 2028. This means the Seattle-based company will provide global high-speed connectivity, benefiting Apple Inc.'s products. Apple Inc. is also preparing a range of new satellite features. Reports from last year indicated that the company is developing satellite-based mapping services, image messaging, and the ability for third-party apps to access its satellite network. One unresolved question is whether Apple Inc. will continue to offer its satellite services for free. This will depend on the Leo access fees that Amazon.com, Inc. ultimately charges to Apple Inc., which could potentially be passed on to users by the iPhone maker.