At The Register, Lewis Page discusses the first successful launch-and-hover by SpaceX’s Grasshopper:
SpaceX, the upstart space startup founded and bankrolled by famous internet nerdwealth kingpin Elon Musk, says it has carried out the first test of a new rocket craft which could lead to development of fully reusable spacecraft.
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Grasshopper uses the fuel tank of the Falcon 9 first stage, but has only one Merlin rocket engine (as opposed to 9 on the real deal), so it is only a test vehicle. It is evidently intended to prove the technology needed to let a rocket descend to a vertical hovering landing. Such kit has already been proven in Moon and Mars lander missions, but is seldom employed for setdowns on Earth — and the job of putting down a towering 100-foot tall booster as opposed to a relatively handy capsule could be particularly challenging.
The idea would be that in future a Falcon 9 rocket stack would lift off as normal: but rather than waiting until the first stage had run out of fuel to separate and fire up the second stage, the lower booster would break away while it still had fuel left — enough to come down to a hovering pad landing. This would rob the whole stack of some lifting power, but on the other hand it would avoid the need to crash the pricey first stage into the sea and destroy it every time. This could potentially slash the costs of space launch: which is the avowed mission of SpaceX.