Two things became true about orbital computing in the past five weeks, and they point in opposite directions.
The capital went vertical. Starcloud is reportedly valued at $2.3 billion. Cowboy Space closed a $275 million Series B at a $2 billion post-money valuation, then showed a rocket whose upper stage stays in orbit as a megawatt-class data center. Google put four data-center TPUs on a prototype and got a haiku back.
The only company in the category publishing a price list is a 2024 startup with $8 million in seed money and software on three spacecraft it does not own. On October 30, Satlyt said it had tested task-planning software on hardware in orbit. One computer was real. Three were simulated.
That gap between the balance sheets and the test bench is the actual investment question.
The case for owning the whole stack
The vertical argument is straightforward. Compute in orbit is a power and thermal problem before it is a software problem. A rack that cannot shed heat is a rack that does not run.
Google's Project Suncatcher prototype carries four Trillium TPUs and about 1 kilowatt of solar generation. It can run one TPU for roughly 20 minutes at a time. The satellite is online, and the question has moved from whether inference works in orbit to how long the chips survive thermal stress and radiation.
Cowboy Space attacks the same constraint from the launch pad. Its Big Iron vehicle is designed to carry more than 15,000 kilograms per flight, with an upper stage that becomes the data center. The skin doubles as a radiator. The ammonia propellant doubles as coolant. First launch is targeted for no earlier than December 2028, and the company has filed an FCC application for the constellation.
Starcloud, backed by Benchmark and valued at $2.3 billion, follows the simpler version: inference on individual satellites. SpaceX is expected to use laser links, though its nodes are projected to orbit too far apart for coherent distributed workloads.
This is the standard infrastructure trade. Own the power, the thermal loop, and the ride to orbit, and you capture the full margin when demand arrives. The risk is equally standard: capex lands years before revenue, and every schedule slip compounds.
The case for renting the layer
Satlyt starts from the opposite claim. Most satellites already carry more compute than they use, and most of that compute reaches a ground station for five to ten minutes per orbit. The bottleneck is not FLOPs. It is routing.
The company sells software that sits between the spacecraft and the application. Operators keep their hardware. Developers buy a deployment slot. Published pricing runs from $5,000 for a single application on one compatible host to $10,000 for a larger pilot, with managed missions starting at $25,000.
There is measured evidence behind the pitch. Satlyt ran Google's Gemma model on a Momentus spacecraft and cut the size of an onboard software-error transmission by more than 60%. CEO Rama Afullo says that kind of reduction can save hundreds of thousands of dollars per satellite each year. The company also holds a NASA STTR contract worth $4 million to design delay-tolerant edge protocols.
If they are the iPhone, we will build Android as a horizontally integrated, open ecosystem.— Rama Afullo, founder and CEO, Satlyt
The seed round was led by non sibi ventures, with TLCOM, Antler, Launch Africa Ventures and others participating. Afullo told Payload the total raised is now well past $10 million. Payload also reports an MoU with xOrbita and Symphony Space to test a joint software-defined architecture, which matters because it puts Satlyt inside the hardware camp rather than against it.
Vertical stacks are financing power, heat rejection, and launch capacity. Satlyt is financing a routing layer across spacecraft that already fly.
The first model needs billions and a Starship cadence. The second needs operator permissions and a working multi-spacecraft demo. Only one of them can be underwritten today.
What the October test actually proves
The test modelled four computers, four users, and eight services. Satlyt's software decided where each task should run, based on available compute and communication links, and sent the plan back to Earth.
That is a real result. It is also narrower than the headline. Only one node was physical. The other three were simulations, so the experiment did not move data between separate spacecraft or execute work across them. Afullo says the best-performing scheduling approach also consumed more computing power, and the team found a logging error: the software recorded when a delay arrived instead of how long it lasted.
NASA funded the research through the University of Houston. NASA has not selected Satlyt for a mission. The next milestone is a demonstration of computing shared across separate spacecraft, which the company expects to attempt next year.
As we wrote in October, Cowboy's Big Iron makes the opposite trade: it treats the data center as a launch vehicle problem. That piece mapped the power and thermal math. Satlyt's result maps the scheduling math. Neither closes the other's gap.
Where the margin accrues
| Dimension | Vertical stack | Software layer |
|---|---|---|
| Capital | $2B+ valuations, $275M rounds | $8M seed, $4M NASA STTR |
| Revenue unit | Compute capacity by the hour | Pilot packages from $5,000 |
| Moat | Power, thermal, launch cadence | Installed base on non-Starlink buses |
| Proof point | Prototypes in orbit | 3 spacecraft, 1-node planning test |
| Principal risk | Capex years before revenue | Operator permissions, untested routing |
Company disclosures, TechCrunch and Payload reporting, October 2026.
The vertical players are selling a future capacity market. Satlyt is selling a present software service, priced low enough that a satellite operator can test it without a board decision.
The share target is where the stories diverge. TechCrunch reports Satlyt aims for about 20% of satellites by 2030. Payload quotes Afullo at 30% of all non-Starlink satellites by the end of the decade. The second number is the one that would justify a venture outcome. The first is the one currently supported by three hosted missions.
For an investor, the layer is an option on every bus that is not built by SpaceX. It is cheap, it has revenue, and it does not require a rocket to work. The option stays cheap until a multi-spacecraft demo lands.
The physics both models share
Neither business escapes the same three constraints. Power is the first. A ground rack draws tens of kilowatts from a grid that never sets. An orbital rack competes with instruments, communications, and attitude control for a solar budget measured in single-digit kilowatts, and it loses half of that budget in eclipse.
Heat is the second. Vacuum removes convection from the toolbox. Every watt of compute has to be radiated away, which means surface area, which means mass. Cowboy's decision to turn the rocket's skin into a radiator is an admission that the thermal loop, not the GPU, sets the ceiling.
Bandwidth is the third. Processing data onboard only helps if the answer is smaller than the raw input and arrives inside a pass window. Satlyt's 60% reduction in error-transmission size is valuable for exactly that reason. It buys back downlink time on a spacecraft that already launched.
The models diverge on which constraint they own. A vertical stack can design power and heat into the vehicle from the first drawing. A software layer has to live inside somebody else's thermal envelope and negotiate for its share of the link. That is cheaper to start and harder to guarantee.
It also explains why the two camps keep signing agreements instead of only competing. Hardware operators need workloads to fill capacity. Software vendors need hosts. The MoU with xOrbita and Symphony Space is a small signal that both sides see the same dependency.
What to underwrite next year
Four checkpoints separate the pitch from a position.
First, a demo that shares work across at least two physical spacecraft, not one real node and three simulations. Second, paying customers beyond pilot packages, with retention measured in mission cycles rather than logos. Third, evidence that vertical operators will license routing instead of building it. Fourth, a NASA mission selection that converts the STTR relationship into a flight commitment.
Until then, the honest comparison is not Satlyt versus Starcloud. It is a $5,000 software pilot versus a $2 billion power plant. Both can be right, and they will not be right on the same timetable.