Dec. 8, 2010 -- The SpaceX Falcon 9 rocket roared successfully into the sky from Cape Canaveral this morning, carrying a stubby spacecraft called Dragon. Three hours later, Dragon splashed down in the Pacific Ocean -- the first privately-owned ship ever to return safely from earth orbit.
"It was just mind-blowingly awesome," said Elon Musk, the Internet entrepreneur who founded SpaceX with money he made from the sale of PayPal.
Amid the plaudits -- Bill Nye, the head of the Planetary Society, said, "Falcon 9 nailed it!" -- there was a humbling reality: SpaceX managed to replicate a feat NASA's Mercury program first accomplished back in 1961. But today's NASA, searching for a clear mission and worried about its budget in a tough economy, badly needs for companies like SpaceX to succeed.
If everything goes well, cargo ships like the Dragon will take the place of NASA's own ships in ferrying supplies to and from the International Space Station. Private enterprise, it's been argued, can do the job more cheaply and efficiently than government, with its layers of bureaucracy.
"If we overrun this program, we have to come up with the money through investment to cover the cost, which is dramatically different from contracts where if the contractor overruns, taxpayers have to pay the overruns," said SpaceX President Gwynne Shotwell.
Eventually, SpaceX says it would like Dragon to be able to carry astronauts as well. The cone-shaped capsule is large enough, and the company is working on equipment to make it safe enough for human passengers.
It also has competitors, including such aerospace giants as Lockheed Martin, which has announced it hopes to fly the Orion capsule from NASA's now-cancelled Constellation project to send explorers to the moon and Mars.
Orbital Sciences Corp., which has been launching small satellites for more than 20 years, is in the hunt too; it plans to launch its new Taurus 4 rocket next year.
Today's launch looked like many that have left from Cape Canaveral since the dawn of the space age. The cylindrical Falcon booster lifted off into a clear sky from Launch Complex 40, which had been built for military rockets in the 1960s and has been heavily modified since.
SpaceX Falcon 9 Rocket
It rose quickly, headed out over the Atlantic Ocean, and soon dwindled to a bright dot. After three minutes it dropped off its first stage, and SpaceX said it reached orbit nine minutes after liftoff.
Applause quickly came from high above -- from the crew of the space station, orbiting at an altitude of 200 miles. "My congratulations to the SpaceX team and good luck," said station commander Scott Kelly, who has been living in space since October.
If SpaceX has more successful tests, it says it could start making trips to the space station in three years. Privately-launched supply ships would free up NASA to follow President Obama's orders, developing more advanced technologies to take astronauts to an asteroid in the 2020s, and perhaps Mars in the decade after that.
"While rocket launches from the Cape are considered a common occurrence, the historic significance of today's achievement by SpaceX should not be lost," said NASA administrator Charles Bolden after the flight.
Bolden said Dragon's flight "shows how government and industry can leverage expertise and resources to foster a new and vibrant space economy.
"These new explorers are to spaceflight what Lindbergh was to commercial aviation."
In an interview with ABC News when he began the Falcon project, Elon Musk said his idea was to keep spaceflight simple -- a SpaceX rocket would be "more like a pickup truck than a sports car," he said. "Although the first flights might be very expensive, I think eventually the prices will reach a point where the average person in America can go to space."
Today, Dragon followed that recipe. It superficially resembles the Apollo spacecraft NASA first flew to the moon in 1968 -- a stubby conical capsule in front, with engines, fuel and power from a section strapped to the rear. SpaceX said Dragon was on its second orbit when it fired its engine to slow down, reenter the atmosphere, and splash into the ocean.
An unmanned Apollo ship first did that in 1966. But SpaceX has the advantage of far more sophisticated rocket engines, materials and computers.
"Splashdown on target. Mission is a success!" the company announced on -- what else? -- Twitter.
Additional reporting by ABC News' Gina Sunseri. The Associated Press contributed to this report.