This promises to be a banner year for private space, particularly at California's Mojave Air and Space Port, where major milestones in the race to sub-orbit and beyond are on the near horizon.

Virgin Galactic and XCOR Aerospace are due to conduct the first powered flights of their respective reusable winged vehicles, Masten Space Systems plans to qualify for NASA's Flight Opportunities program with its vertical-takeoff-and-landing rocket, and Stratolaunch Systems is starting construction of its enormous orbital air-launch carrier aircraft.

Aside from location, the common denominator between these and other equally diverse commercial space projects is that all the key people behind them were in Mojave in 2004, craning their necks to witness the successful sub-orbital flights of the Scaled Composites-built SpaceShipOne. They were there to see Burt Rutan's design, funded by Microsoft co-founder and billionaire Paul Allen, clinch the $10 million Ansari X Prize for the first non-government organization to launch a reusable, manned spacecraft into space twice within two weeks.

First conceived by X Prize Foundation founder Peter Diamandis in 1995, the competition was aimed at spurring the development of low-cost spaceflight and, according to many of the Mojave community today, has succeeded beyond its founder's wildest dreams. The concept of galvanizing private enterprise and with it, the entrepreneurship of individuals and industry, is almost as old as the history of powered flight itself.

When Anousheh and Amir Ansari agreed to pump millions of dollars into the X Prize in May 2004, just months before it was claimed, they propagated a tradition reaching back to the first major aviation prize. In November 1906, British newspaper magnate Lord Northcliffe offered through his newspaper Daily Mail £10,000 (roughly $1.4 million today) to the first who could fly from London to Manchester in 24 hr. with not more than two stops.

Two years later, with the first prize still unclaimed, Northcliffe was growing impatient with the pace of technological progress as well as the government's apparent indifference to aviation. In 1908, he wrote to Winston Churchill, then a new cabinet minister: “a man with a heavier-than-air machine has flown. It does not matter how far he has flown. He has shown what can be done. In a year's time, mark my words, that fellow will be flying over here from France. Britain is no longer an island. Nothing so important had happened for a very long time. We must get hold of this thing, and make it our own. I will think out what is best to be done.”

The result was another Daily Mail prize. This time £1,000 was offered for the first to fly the channel between England and France “to be accomplished in daylight without touching the sea.” The prize was won in 1909 by French aviator Louis Bleriot, sparking a new wave of interest in, and appreciation of, aviation. Among those feeling the effect was Raymond Orteig, a French-born immigrant to the U.S. who owned a hotel in New York called the Lafayette.

The hotel was a haunt of World War I pilots, including French officers on deployment to the U.S. who were helping set up the fledgling Army Air Corps. This association, together with speeches about Franco-American friendship at a 1919 Aero Club of America dinner to honor Eddie Rickenbacker, persuaded Orteig to offer a prize of “$25,000 to the first aviator of any Allied Country crossing the Atlantic in one flight, from Paris to New York or New York to Paris.” This was of course won by Charles Lindbergh, who completed the first transatlantic flight, solo, in May 1927.

Seven decades later, Diamandis read Lindbergh's book about his pioneering flight The Spirit of St. Louis, and used the Orteig concept as a model for an X Prize focused on access to space. The prize was just what the nascent market needed to spark it into life, says Richard Branson, founder of Virgin Galactic, the world's first “spaceline” designed to carry tourists to sub-orbit. Based on a growth version of the carrier aircraft and launch vehicle concept developed by Scaled Composites, the Virgin Galactic business model has expanded to include science missions and satellite launches.

“The Ansari X Prize was critical because it identified some truly world-class talent and proved to me and to our future astronauts that this goal of privately sending people to space was actually possible,” says Branson. “Of course, we'd been wanting to start a spaceline since long before the X Prize was announced; we even registered the name Virgin Galactic well before I knew about SpaceShipOne. But a name and idea don't mean much at all unless the technology is there to back it up, and in speaking to all of the 'usual suspects' in the space industry, we'd found no one who could deliver a safe but wonderful experience at the price we thought the market would bear. The X Prize fixed that for us: All of a sudden, here were 26 teams trying to solve that specific problem, and we could observe and simply pick out the best one.”

Although not necessarily an answer to every conundrum, the idea of a competition can sometimes be useful to opening other doors, says Branson. “Prizes don't work in every case, but when they do work, they are extremely effective. As an entrepreneur, I can absolutely understand why these challenges are so powerful,” he says. “They call to innovators and inventors, and force them to tackle an interesting problem quickly and efficiently. We tend to keep an eye on the progression of these prizes. Even when we don't compete directly, they are great ways to identify new talent and new ideas.”

David Masten, founder and chief technology officer of Masten Space Systems, recalls that he was “at the airport to watch the original X Prize attempt in June 2004.” However, the Mojave-based company's big break came with a follow-on competition—the Northrop Grumman Lunar Lander Challenge, a NASA Centennial Challenges program conducted by the X Prize Foundation.

“That was pretty much how our company got into this world,” says Masten. “We'd been around for four-and-a-half years, working quietly in the background and, all of a sudden, NASA knew who we were.” The company, which is developing reusable vertical-takeoff-and-landing rocket launch vehicles, was a contest winner along with competitor Armadillo Aerospace. “I had difficulty before that getting people to return my calls and, after winning that, I sometimes had difficulty getting work done between calls!”

Masten engineer Travis O'Neal says he, like many working today in the “new space” industry, was inspired by the original X Prize. “I was getting out of the military at the time and I didn't know what to do. The whole X Prize happened and made me realize that commercial space was possible, and that is the next frontier. So I went to school to do aerospace engineering—I didn't even know Masten existed at that time.”

Masten cautions, however, that the “prize” concept is not necessarily a panacea. “I think prizes, as long as they are done well, are very good for the industry. The difficulty is getting the prize amount to the right level to suit the challenges you are trying to overcome. For instance, with the amounts set by NASA for the Centennial Challenge we said it wasn't worth it.”

XCOR President Jeff Greason also agrees that X Prizes can have a significant impact but, so far as commercial space development is concerned, he says the Ansari X Prize event was “useful, but I don't think it was pivotal.” The prize was most useful in raising space awareness, he says. “There have been few events that have acted to change public perception of what space is, and what can be done there. The X Prize has helped make suborbital spaceflight a household word again. I used to have to explain it all the time. It helped popularize the notion that companies will be selling tickets.”

Greason notes that “prizes are useful drivers and are most usually found where there's some technology challenge or where there are many wildly dissimilar ideas about what's the best approach.” However, he adds that the value of the purse does not always scale to the task, and vice versa. “If you need $1 billion to win the prize, then it's simply not open to the guy in the garage—it's not going to work.” The contest “gave a focus to Burt Rutan and his team at Scaled Composites and who knows whether they'd have got Paul Allen [to back the venture] without the impetus of the X Prize,” he adds.

X Prizes are also “a great way for governments to simulate endeavors without picking winners,” says Greason who points to NASA Centennial Challenges and the Lunar Lander concepts that came out of it as an example. “Bigger projects respond more to market stimulus than one-off prizes, and NASA's Commercial Orbital Transportation Services is a better model for that.” Branson adds, “some people say prizes are less effective at really large sizes, and I suspect there's some truth in that—but I think there is still great room for growth in terms of offering more prizes in more fields.”

Allen also attributes the birth of Stratolaunch to the X Prize and the successful flights of SpaceShipOne. In a statement, Stratolaunch says that after the final flight, Rutan and former NASA Administrator Mike Griffin “began discussing the potential for a follow-on, orbital system. Paul Allen expressed his interest in funding the development of such a system as a means of reestablishing U.S. leadership in space launch and continuing his legacy of privately funded spaceflight.”