What is New Space?
New Space (also written NewSpace) is the term for the commercialisation wave that transformed the space industry from a government-dominated sector relying on large, bespoke, cost-plus-contracted systems into a competitive market of commercially funded companies applying commercial technology practices: iterative development, acceptance of higher technical risk, vertical integration, and mass production. The distinction is less about funding source (private vs. public) and more about culture, business model, and engineering philosophy.
Key characteristics
Rapid iteration: SpaceX's approach of building, testing, and accepting failures as data — crashing Falcon 9 prototypes to learn landing techniques — contrasts sharply with the traditional 'test before you fly' government approach. Vertical integration: SpaceX designs and manufactures its own engines, avionics, and software. Planet Labs builds its own satellites in-house. This control over the supply chain reduces cost and accelerates schedules. COTS components: Using commercial off-the-shelf electronics rather than radiation-hardened space-grade components (at the cost of accepting higher failure rates mitigated by constellation redundancy). Venture capital funding: SpaceX, Planet, Rocket Lab, Spire, and others raised billions in private equity before becoming profitable.
Market impact
New Space companies have driven launch cost reductions of 90% over 15 years (Falcon 9 at ~$2,700/kg to LEO vs. $50,000/kg for the Space Shuttle). They have enabled Earth observation data with daily global coverage, satellite IoT at prices viable for agriculture and logistics, and LEO broadband internet for rural populations. The total private investment in space companies exceeded $10 billion annually by 2022.
Old Space response
Traditional prime contractors (Boeing, Lockheed, Airbus) have established New Space subsidiaries (Boeing HorizonX, Airbus Ventures) and acquired New Space companies. Governments have adapted procurement — NASA's Commercial Crew and Commercial Resupply Services programmes pioneered fixed-price, performance-based contracting that has since spread across defence and civil programmes.