Posts tagged "Drone Market"

We just released the results of our third annual drone industry benchmark survey and it’s a kicker.

The 2018 Drone Market Sector Report examines worldwide drone sales, service providers, business and public agency users, and software services. This independent research, which is sponsored by DJI, DroneDeploy, DroneInsurance.com, and Trimble, finds a growing demand for businesses to use drone-acquired data in their day-to-day operations as well as other fresh insights on major drone industry segments.

Research

Our online market survey garnered over 2,500 respondents representing over 60 industries worldwide. Our analysis yields 10 key insights that summarize the current state of the industry, plus detailed analysis of drone adoption by businesses and enterprises.

Report

The 107-page report presents the results and analyses from each survey question. It’s organized to match our survey, with four sections that correspond to the four major segments of the drone industry:

  1. Drone aircraft and payloads purchased
  2. Service providers that offer drone-based imaging or sensing services for outside hire or sale
  3. Businesses and public agencies with drone programs
  4. Software apps or online services for drone operations and imaging

The report features more than 60 helpful figures and tables and offering insight and analysis on:

  • Who’s buying what types of drones from which makers at what prices and for what uses.
  • How large the drone-based service providers are, and how they position themselves to their target industries.
  • Who the business users of drone-based projects are, and which industries have traction.
  • How much service providers, business users, and public agencies are using flight management, mission planning, and image processing software for drone-based projects.

Findings

Among the more interesting findings are that commercial drone fleet sizes are smaller than most people think. If you believe the hyperbole, there are hundreds of thousands of drones in the airspace at the same time, but the survey finds that the average commercial user has just two drones that are only flying two projects a month and most of those flights consume less than flight three hours.

There are many other insights in the report, but these three are especially worth highlighting:

  • Professional use of drones is growing. We find that almost three-quarters of all drones weighing over 250 grams are purchased for professional purposes—either governmental or business. This is up from last year.
  • DJI continues to dominate the market and has made gains this year in every category from drone aircraft at all price ranges, to add-on payloads, to software. Survey data shows DJI is still the dominant brand for drone aircraft purchases, with a 74% global market share in sales across all price points.
  • Most businesses and public agencies are new to drones, have small programs, and perform their own services. The survey finds that nearly three-quarters of businesses or public agencies have only had a drone program in place for two or fewer years.

How to get it

You can download a complete prospectus or purchase the report here: http://droneanalyst.com/research/research-studies/2018-drone-market-sector-report-purchase

Image credit: Skylogic Research

In this August 2018 report, we list the top software applications and data services for processing drone images.

This one-page report includes

  • Vendor name
  • Product name
  • URL link to the website

Read more about drone data services in 5 Tips for Evaluating Online Drone Data Services.

Complete the form to get your free report

We’ve just announced the release of our Quick Start Guide to Drones in Public Infrastructure. This new report is the third and final series of white papers we’ve done to provide a complete primer to drone use in specific industries.

The report consolidates our best insights into the challenges and solutions drones add to inspecting assets like bridges, dams, highways, towers, and railways. It shows how drones add value to digital representation of physical assets and what information companies and public agencies are gleaning from the data their drones collect.

The paper answers questions like:

  • How big is the public infrastructure inspection drone market, and who are the major solution providers?
  • How do state DOTs, civil engineers, railroads, and telecommunications firms use drones and what challenges must be addressed?
  • What do you need to know about regulations, pilot certification, insurance, and training?
  • What are the best practices for adopting drones into existing workflows?

Here is an excerpt from the Drone Use in Public Infrastructure section:

“MDOT estimates that a standard bridge deck inspection takes eight hours, a crew of four people, and heavy equipment – costing at an estimated $4,600. The same inspection with a drone, however, requires just two people and two hours to complete at an estimated cost of $250.

A March 2018 survey, by the American Association of State Highway and Transportation Officials, found that 35 of 44 responding state departments of transportation (80%) are using unmanned aircraft systems (UAS) for a wide range of purposes. The survey also finds that 20 state DOTs have incorporated drones into their daily operations. All 20 are deploying the technology to gather photos and video of highway construction projects. In addition to photography, 14 states also reported using them for surveying, 12 for public education and outreach, 10 for bridge inspections, eight for emergency response, six for pavement inspections, five for scientific research, two for daily traffic control and monitoring, and one for conducting high-mast light pole inspections.

Of the 35 states deploying drones, 23 have established comprehensive policies that cover the acquisition, operation, airspace restrictions, and training and permitting of drones and pilots. Twenty-seven of the state DOTs said they were adding full-time staff to operate and maintain their drone fleets.”

The 10-page report also provides a SWOT analysis (strengths, weaknesses, opportunities, and threats) for evaluating and designing your drone program and comes with an appendix that includes links to valuable online resources such as attorneys, advocacy groups, training & certification, and waivers & authorizations.

You can get the free report here.

Image credit: Emerald Expositions

We just announced the launch of our third annual Drone Market Sector Research survey, which promises to be our most comprehensive study of drone market trends and usage to date. The online portion of this research seeks to get information about who is buying and using small unmanned aircraft systems—otherwise known as drones. It improves upon the 2017 research by, among other things:

  • Asking more specific questions about flight operations and flight times
  • Investigating the adoption and maturity of enterprise and/or public agency drone programs
  • Diving into how users geo-reference images for maps

Take the brief 10-minute survey here: https://www.surveymonkey.com/r/2018_drone_market

As an incentive for participation in the survey, there will be an opportunity to:

  • Receive a free summary report of the research results, a $95 value
  • Enter to win a free DJI Spark mini-drone package (a $425 value) or one of two $100 VISA gift cards.

What’s new?

This year’s research is designed to uncover fresh insights on which drone industry sectors are thriving (and which aren’t) and how businesses are using drone-acquired data in their day-to-day operations. Skylogic Research hopes the survey results will fill a gap in knowledge and understanding of the commercial drone industry around:

  • Actual drone and drone data usage (most reports forecast use but don’t survey actual users)
  • How and why operators and users are deploying drones now and how/why they plan to grow their use in the future
  • Baseline statistics for market share among the brands as well as information about the size of service providers, enterprises, and businesses that have drone programs

The online portion of this year’s research seeks to get information about who is buying and using small unmanned aircraft systems. This independent study is being supported by DJI, DroneDeploy, DroneInsurance.com, and Trimble.

The survey will explore:

  • Who’s buying what types of drones from which makers at which prices and for what uses?
  • How large are drone-based service providers, and how and where are they positioning themselves to whom and which target industries?
  • What most concerns businesses that perform drone-based projects and why?
  • How much are service providers, business buyers, and public agencies using flight management and data analytic software for image-based projects?

Our previous studies have found that more consumer drones are being used for professional use than ever before, the U.S. market is flooded with service providers and remote pilots but very few make enough money to sustain a full-time venture, and film / photo / video dominates both the hobby and professional uses of drones. This year’s study will continue to challenge these insights and explore further the sustainability of drone service providers.

Who should take the survey?

  • Individuals or organizations who have purchased a drone in the past 12 months for any reason
  • Commercial drone service providers
  • Businesses, enterprises, and public agencies that perform drone-based operations

Why this study?

We believe the consumer and commercial drone market needs this annual benchmark study. There is a lack of objective information on the drone industry. We find an absence of credible market-based research and little understanding of the difference between large industry forecasts and actual buyer adoption rates. This study will clarify much of that.

When complete, the research study will provide a complete view of topics like:

  • Critical industry drivers
  • Vendor and service provider market share
  • Business and public agency adoption trends and issues

The survey will be open for four weeks, and results will be available in September.

Image: Shutterstock and Skylogic Research

I’m happy to announce the release of our Quick Start Guide to Drones in Energy. This report is the second in a new series of Skylogic Research white papers, intended to provide a complete primer to drone use in specific industries. This year, we are building on the analysis we did for the 2017 Five Valuable Business Lessons Learned papers by providing guidance and industry-specific resources that will help you kick-start your practice. Our goal is to help drone-based service providers and business users maximize the value that drones can bring to operational groups.

This report consolidates our best insights into the challenges and solutions drones add to inspecting assets that produce and supply energy. We show how drones add value to digital 3-D representation of physical assets and what information companies are gleaning from the data their drones collect.

The paper answers questions like:

  • How big is the energy inspection drone market, and who are the major solution providers?
  • How are drones used by oil and gas companies, wind and solar farms, and utilities and what challenges must be addressed?
  • What do you need to know about regulations, pilot certification, insurance, and training?
  • What are the best practices for adopting drones into existing workflows?

Here is an excerpt from the drone use in energy asset inspections section:

“The number keeps growing, but GWEC estimates that there were over 341,000 wind turbines spinning around the world at the end of 2016. Unidentified defects can result in an unexpected catastrophic failure, causing expensive repairs, extended downtime, and associated revenue loss. Revenue losses alone from unexpected catastrophic failures can be as high as $50,000 per turbine.

Companies like AES Corporation and Duke Energy have realized tremendous cost savings using drone inspections. For example, drone-based service provider Measure can automate wind turbine data collection and inspection, making the process cost-effective and reliable. With traditional ground inspection methods, a two-person crew is able to inspect 3–4 turbines in a single day. A drone pilot can inspect 12–15 turbines in the same period. Plus, it’s a lot safer than sending inspectors out on rope harnesses high above the ground.

According to Solarplaza, drones can cut the cost of solar-farm panel inspections to between USD $2,100 and $3,200 a day, covering five acres an hour. According to one published report, a drone can survey 4,000 panels in about five minutes, while a human inspection would take more than eight days at a rate of one panel inspection per minute. The technique involves mounting a high-definition infrared camera on a drone and running the images through an analysis program to detect hotspots that might reveal the presence of faults. Maintenance teams can then visit these hotspot locations directly, without having to survey the entire solar field, which saves on operational costs.”

The 10-page report also provides a SWOT analysis (strengths, weaknesses, opportunities, and threats) for evaluating and designing your drone program and comes with an appendix that includes links to valuable online resources such as attorneys, advocacy groups, training & certification, and waivers & authorizations.

I believe this is the perfect time to get your start using drones in the energy industry like scores of firms worldwide have done. You can get the free report here.

If you have questions about what’s in the report or would like to comment on it after reading it, write me at colin@droneanalyst.com.

Image credit: Emerald Expositions

I’m happy to announce the release of the Quick Start Guide to Drones in Construction.

This report is the first in a new series of Skylogic Research white papers, intended to provide a complete primer to drone use in specific industries. This year, we are building on the analysis we did for the 2017 Five Valuable Business Lessons Learned papers by providing guidance and industry-specific resources that will help you kick-start your practice. Our goal is to help drone-based service providers and business users maximize the value that drones can bring to operational groups.

What’s in it?

This report consolidates our best insights into the challenges and solutions drones add to the worksite. We show how drones as a unified data collection device are bridging the gap between the Architectural, Engineering, and Construction (AEC) silos. We answer questions like:

  • How big is the construction drone market, and who are the major solution providers?
  • How are drones used in the AEC industry, and what are the challenges?
  • What do you need to know about regulations, pilot certification, insurance, and training?
  • What are the best practices for adopting drones into workflows?

Here is an excerpt from the lessons learned / cautionary tales section:

Be clear about customer value – When drone business service providers talk publicly about the differentiation of drones, you’ll often hear them say: “It’s all about the data.” But one of the lessons learned from the early adopters of drones in construction is that it isn’t just about the data. It’s about getting good information that provides value for the construction or architectural firm. So whether teams are collaborating around one daily map for a construction site as “the single source of truth,” or providing floor-by-floor visualization views for a future building site, the ultimate goal is to provide valuable information for downstream customers—and drones alone cannot do that. What drones can do is offer a much quicker way of capturing different types of data, digitizing it, and making it something you can analyze immediately or over time to support construction variance analysis.”

What resources does it provide?

The 10-page report provides a SWOT analysis (strengths, weaknesses, opportunities, and threats) for evaluating and designing your drone program and comes with an appendix that includes links to valuable online resources such as attorneys, advocacy groups, training & certification, and waivers & authorizations.

I believe this is the perfect time to get your start using drones in the construction industry like hundreds of firms worldwide have done. You can get the free report here.

If you have questions about what’s in the report or would like to comment on it after reading it, write me at colin@droneanalyst.com.

In my last post, Five Biggest Commercial Drone Trends of 2017 and the Challenges Ahead, I used data from our 2017 Drone Market Sector Report to illustrate the major trends of the past year and describe the major challenges ahead for the drone industry. That post looked back, but this one looks forward, offering our specific predictions for 2018, including investments, technology improvements, ecosystem partnerships, and software innovations.

(Listen to this companion Drone Radio Show podcast here for our complete assessment.)

1. Investment and testing will continue in earnest on Unmanned Traffic Management (UTM) and beyond visual line of sight (BVLOS) operations.

With regulations moving at the speed of government and dissenting views on Drone ID, it seems like UTM (air traffic management for low-altitude drones) is an elusive dream. However, there is hope that testing being done on beyond visual line of sight (BVLOS) operations in drone corridors will provide the necessary inputs to integrate drones into the national airspace. Expect news this summer from the vendors and service providers conducting tests at NUAIR in New York as they release results and performance-based navigation standards begin to coalesce.

2. You’ll see more news on improved sensors, hardware integration, networking, and processing.

Already, we’ve seen announcements like this one for new thermal imaging drone payloads. Expect to see further Ethernet / IP sensor integration efforts as more and more remote managers demand immediate access to data from local operations. Expect more news on LiDAR / drone integration like this one from Delair-Tech as more land surveyors and construction professionals demand further time and money savings over traditional methods.

3. Look for more partnerships, software, and innovations coming from the DJI Enterprise ecosystem.

We noted in our 2017 Drone Market Sector Report just how much DJI dominates the industry with its 72% market share. All the major mission-planning and mapping applications—like DroneDeploy, PrecisionHawk’s PrecisionMapper, Skycatch, and dozens more—now run on the DJI SDK. What our report didn’t mention was DJI’s focused efforts to further expand its commercial ecosystem. DJI Enterprise’s AirWorks Conference is but one example, an event whose purpose is showcasing applied drone solutions for the commercial industry’s most challenging obstacles. Expect many innovations from DJI’s partners in the hardware, software, and service sectors.

4. Software will dominate advancements.

Along with the new imaging sensor announcements in 2018, we expect to see imaging software advancements as companies seek to combine RGB, thermal imaging, orthomosaic, and radiometric data.

We also expect to see more aerial imaging and mapping software firms announce artificial intelligence (AI) capabilities. Right now, most of this is cloud-based machine learning (aka deep learning and predictive analytics) where data sets are trained by specialized teams. You may see some edge-based AI announcements for image recognition/machine vision, but be cautious when you do. We think it’s still early in the technology development cycle and AI is at peak hype.

We think the big news for 2018 will be the integration of drone data and workflow into asset management systems. Capabilities include documentation, tracking, and GIS data integration. It may bring a yawn to some but we believe when you can connect the dots and show the effect of drone data capture on the balance sheet, CFOs and CEOs will take notice and drive further enterprise adoption.

Parting thoughts

As I speak to clients, I always like to remind them of two things about the commercial drone market. First, it’s not a drone market, it’s a data and information market. The drone is just a data capture device. Second, drones are aircraf, not consumer products and as such their operations are regulated by aviation authorities.  All technology advancements aside, this is a regulated market, so always expect lumpy, bumpy growth.

We hope you keep those in mind as well and wish you best success in the coming year.

Listen to the companion podcast here http://bit.ly/2CXe6uK.

If you have questions about what’s in the report I mention or would like to comment, write me at colin@droneanalyst.com.

Image credit: Shutterstock and Skylogic Research

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The changes and developments we saw throughout the drone industry in 2017 were incredible and deserve a proper examination. For the most part, the hype that drove so much misunderstanding and frustration in this space is gone,and that’s a good thing. While the kind of hype we’ve seen associated with UAVs can create needed attention, it can also lead to irrational behavior and impossible expectations. Now that we can get a better sense of when drones will be able to reach the “plateau of productivity” from the Gartner Hype Cycle, we can finally talk about the organizations and uses of this technology that will truly drive and define the drone industry.

How does our Drone Ecosystem Map help define what these developments look like in 2018 and beyond though? First, it provides a great overview of the most active and relevant players in the drone industry in their category and sub-category. We limited the Map to 1,000 players so you can focus on the companies and people that are set to have the biggest impact on the drone market. The Map is not totally comprehensive, and it’s not supposed to be. The focus is on the diversity and reach of this drone ecosystem.

The second way it can help is directly related to the first, since the Map can help you uncover niches and players you might not otherwise come across in this vivid market. Since we’re not trying to provide you with an all-encompassing look at the drone industry as a whole, you can use the Map to find technology and organizations that can make for ideal partners. We’ve heard from countless people who got in touch to say they used the previous version of this Map to locate strategic partners. This is a resource that has led to a great deal of investment for people on every side of the drone industry. Transparency can and does drive decisions in this space, and that’s why we want to share our knowledge with anyone who is or will be making a decision about drone technology.

If we look at the drone industry as a whole in 2017, we can see a clear movement towards investment in software. Many companies realized that it’s not the drones themselves that provide value for users, but instead it’s the data they’re gathering. This is part of the reason we’ve seen such a dramatic increase in strategic partnerships. Stand-alone drone hardware is not what commercial customers are looking for when considering drone technology. Many of the players in the drone industry realized that creating a complete solution was the best approach, and that desire drove many of these strategic partnerships.

If you compare the 2016 and 2018 Maps, you can see some interesting trends that have and continue to permeate the drone industry. 10% of the companies listed (711 total entries) in the 2016 map are gone. 360 new entries were added, which is indicative of the strong movement that we’re seeing in almost every sector. It’s impossible to stay on top of all these movements though, as major changes like GoPro moving away from the drone business took place in the first couple weeks of 2018. We’ll see more headlines like these throughout the year, as this market continues to be defined before our eyes. Now let’s take a closer look at the most important developments in the drone industry:

Platform Manufacturers:

  • A great deal of consolidation is happening, and that’s something you can see with the mergers, acquisitions, drop-outs and focus changes. 3DR, PrecisionHawk, and Agribotix have moved away from hardware and are now mostly or wholly focused on software. Much of this has been triggered by the market superiority of DJI. 3DR officially noted that competitive pricing was a key reason for their $100m failure in hardware.
  • There’s a trend toward strong specialization in specific industries and with custom configurations. Agriculture, delivery systems, safety & security are some of the bigger industries that are seeing this development of specialization. That’s being augmented by specialized configurations, which have also created new niches and provided unique selling points. These configurations include fixed-wing, VTOL fixed-wing and lighter-than-air.
  • The AAT’s (Autonomous Air Taxis – also called flying-cars or e-VTOLs) sector has come on in a big way, and there’s a lot of funding in this space. Big companies seem to grab the best pieces before it’s too late, which is something you can see with developments like Terrafugia being acquired by Volvo-owner Geely, and Aurora Flight Sciences being acquired by Boeing. We’re also seeing some pivoting happening in this sector, as companies like Ehang have changed their strategy to move away from recreational drones to AAT’s.
  • In the consumer/recreational market, drone racing events and selfie drones continue to define the space. Many have had to fight to stay relevant here, as Parrot’s struggles in the space directly led to the transition of Bebop for commercial purposes, Lily’s failure allowed the Mota Group to acquire the product and DreamQii had to issue refunds on account of their PlexiDrone.

Software:

  • Powerful pieces of inspection software have been developed which utilize pattern recognition for asset management. The industrial needs to integrate AI & Deep Learning algorithms will allow these programs to automate inspection processes even more, and in turn, provide more value.
  • Many strategic software partnerships have been formed to provide end-to-end solutions because many organizations have recognized that providing one piece of the puzzle is not enough.
  • API’s and approaches that allow drone data to be integrated into existing processes quickly become a requirement. Opening channels (API) and tools that integrate drones into established processes came on in a big way in 2017, and that development will become even more distinct in 2018.
  • Aerial Data Providers such as Airbus Aerial and Intel Insights have taken the concept of aerial acquired data to a new level. Providing a virtual data platform for satellite, plane and drone data unshackles them from drone operation and the corresponding risk.
  • The UTM has unlocked many national and international partnerships, and we’ve started to see the results of these developments. Skyward and Airmap have become the first organization to be able to provide LAANC accreditation.

Service:

  • There’s a lot of talk about drone logistics services, but we’ve finally seen an impact that has gone beyond marketing. Matternet and Zipline are just two of the companies that are frequently flying medical deliveries in Europe and Africa. Drone-based warehousing solutions are also on the rise.
  • Drone show providers have showcased an entirely new application for the technology. Intel’s’ halftime-show and many other drone swarms have ushered in a new era of outdoor and indoor entertainment.
  • System integrations that are being provided and created have taken on critical importance. More tailor-made solutions are required by various industries, and that means more providers are working to alter standard configurations to meet industry-specific needs
  • Drone accelerators programs have uncovered the potential of the extremely quick-moving drone companies. They’ve jumped started new companies, and more of that will happen in 2018.
  • Organizations that provide Drones as a Service (DaaS) have matured to the point that providers have proven they can contract big business. This service has also been augmented by certain jobs whose complexity has been reduced, meaning that the DaaS model can allow savings to stay in-house.

Counter-UAS:

  • This is a new market in the civil world that’s rapidly growing with big funding and large international partnerships
  • Pure CUAS conferences and expos have been created to explain threats and opportunities
  • There are limitations for physical and non-physical systems that include jammer restrictions (federal network agency) and problems for health in public spaces (e.g. pacemakers).

Components and Systems:

  • High priced equipment and flights in populated areas call for rigorous safety measures, which is why there’s been a proliferation of launch & recovery They provide more awareness and available solutions for operational security.
  • Brand new drone propulsion methods have been developed, and they’re as essential as they are powerful. Hybrid systems(battery/fuel cell, gas/battery) allow long endurance/range by optimizing mission requirements for hardware.
  • Cameras are now being used for indoor navigation while FLIR cameras almost sold out due to high demand from industry.
  • Encrypted data links are getting very popular since the standard drone-to-ground communication is quite vulnerable. Data & communication logistics and details will continue to be a top priority.
  • Drone ground stations, aka “drone box” solutions, have been labeled by some as complete solutions since they offer a roof over your drone and the ability to wirelessly charge/exchange batteries before the drone takes off on a new pre-programmed flight.

Drop-outs/Struggle:

  • Crowdfunding does not seem to work, as we saw a lot of failures and bankruptcies. Those include Bionic Bird, Micro Drone, FlyPro, Lily, Onagofly and Globe Drone, among others.
  • Many supplier/retailer vanished due to hard competition and not yet high demand, especially in Europe.
  • Yuneec laid off 70% of its U.S. staff in March of 2017 and introduced a new CEO. Parrot announced in January 2017 that it was going to reduce its drone team from 840 employees to 290 people, which represents a reduction by about 66%. Autel also laid off employees in February 2017, while GoPro just announced they were entirely shutting down their drone division and laying off more than 200 employees. All of these developments are an indication of how untenable the aerial market is, and that’s mostly due to the dominance of DJI.
  • While niches like drone racing and selfie-drones seem to work well for many startups, there’s a simple fact that’s impossible to get around: building hobby drones is hard. It’s going to get even more competitive now that DJI has announced ‘Tello’ – a $99 selfie drone designed by Ryze Tech.

Takeaways

  • Machine learning for drone navigation and data analytics is driving numerous developments.
  • The degree of automation and adoption of drone technology will further increase.
  • Conglomerates will directly address the drone market. In the past startups, came up with niche solutions and sometimes were happy to partner with a big industry player, which is something that happened with Airware and Caterpillar. Now though, big companies like Komatsu & NVIDIA are partnering to bring solutions with a bigger scope to the market. Those are partnerships designed to sort out logistics related to topics like AI. It begs to question of whether we’ll see companies like IBM and Hitachi or Qualcomm and Mitsui form the next major partnership that will have a direct and indirect impact on the drone industry.
  • There is a lot happening under the radar in China, especially in agriculture and delivery.

All of these developments are indicative of how and why 2018 is going to be so exciting. The drone industry as a whole will undoubtedly go through some exhilarating highs and discouraging lows. We’ll see solutions that are going to become mature and easier to integrate into existing workflows as well as new capabilities that will enable uses few have even considered. The Drone Ecosystem Map will be a critical resource you’ll be able to refer to and utilize throughout this process. To learn more about the players, their capabilities and their role in the market feel free to contact us. To learn more about the companies listed on the map, check out our services.

No matter if overhyped or not, a well-educated market is a stable market. That’s the kind of market we can all contribute to and want to be part of.

Have a great and successful year 2018!

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Previous articleExpert Roundup: How to get started with drone videography and photography

Last year at this time, I reflected back on the news and trends of the commercial drone markets of 2016 and wrote about the mixed state of affairs ahead for 2017. Throughout the year, I offered my perspective on how the drone industry was still motivated by hype and how assessing forward momentum required hard data on the performance of the various sectors of the industry. To that end, we did research over the summer that surveyed 2,600 respondents on drone purchases, service providers, business users, and software services. In September, we published the data in 2017 Drone Market Sector Report 2017.

In this post, I’ll use that data to illustrate the major trends of the past year and describe what I think are the major challenges ahead for the drone industry.

Listen to this companion Drone Radio Show podcast here for the complete assessment.

Trend 1—Growth

By all measures, the drone industry in 2017 was marked by significant growth – growth in aircraft sales, software licenses, the number of service businesses entering the market, and the number of industrial businesses setting up commercial operations.

Here are a few statistics:

  • We project U.S. sales in 2017 to be about 3.3M units, which is 36% above 2016 figures. That’s all drones, all sizes. It’s about 1.3M units for the >250gram category.
  • As of October 31st, there were about 837,000 hobbyist users and 107,000 non-hobbyist drones registered with the Federal Aviation Administration (FAA).
  • As of December 1st, there were about 66,000 Part 107 FAA Pilots.

This represents a big change in the commercial market since Part 107 regulations supplanted Section 333 as the means for commercial operations in the U.S. What this and our survey data tells us is the number of service providers currently outpaces demand, and as a result, service prices are coming down significantly.

Trend 2—Consumerization

We said in our report that more consumer drones are being used for commercial work than ever before. For example, our data shows that more than two-thirds (68%) of all drones weighing over 250 grams are purchased for professional purposes—either governmental or business.

Why is this significant? Because the impact of consumer-originated technology on the enterprise is something that can’t be ignored. Enterprises want to take advantage of powerful, yet easy-to-use products (like DJI’s popular consumer models), and put them to work on the job. What this means for operators or businesses is that a shared core technology benefits all users and enables companies to scale the best experiences to everyone. Enterprise customers get the added simplicity and usability of the consumer product that has been built to meet the demands of thousands of customers around the world.  The average individual pilot gets to benefit from the reliability and scalability inherent in the product and demanded by enterprise users.

Trend 3—The DJI effect

Our data shows DJI is the clear market leader in drone aircraft sales and almost every software category. For example, DJI is the dominant brand for drone aircraft purchases, with a 72% global market share across all price points and an even higher share (87%) of the core $1,000–$1,999 price segment. Additionally, in the three categories of software we evaluated, DJI is the market-share leader in two: flight logging and operations, and automated mission planning.

This is significant because by building on top of its existing technology platform, DJI has fast-tracked development and has benefited from economies of scale. By migrating a successful technology stack and feature set upmarket, DJI never has to reinvent the wheel—it just needs to improve upon the original design and save engineering cycles for real innovation.

The upshot is that to stay relevant, all the other major vendors have had to partner with DJI (see Trend 5 Partnerships, below). DJI’s sales success has taken market share from others and has led to layoffs at 3DR, Autel, GoPro, Parrot, and Yuneec. However, fears about data security remain. And this has some speculating about whether DJI can sustain its leadership role in the future.

Trend 4—Investments

According to CB Insights, investments shifted in 2017 from aircraft hardware to software. In 2016, there were 106 deals totaling $542M. Most of these were for hardware. In 2017, VCs focused on software, end-to-end solutions, and counter-drone technology. CB Insights projects the year will end with 110 deals totaling $494M. The most significant investment this past year was 3D Robotics’ $53M Series D round. It saw them pivot from hardware to software services.

Why is this significant?  Because it shows the industry is still maturing. Seed and Series A rounds represented 60% of all deals in 2017; whereas early-stage share peaked in 2015 at 73% of deals. Additionally, some of the most well-funded drone companies are targeting enterprise and industrial inspection.

What this means for operators or businesses is greater affordability. Software advances, computer chip manufacturing techniques, and economies of scale will continue to drive down the cost of drone platforms and sensors and solutions.

Trend 5—Partnerships

This year we saw a change from synergistic merger and acquisitions to the creation of end-to-end solutions via partnerships. For example, look at how DJI’s enterprise partnerships have grown. Consider their AirWorks conference. What drone major vendor wasn’t there? The list included DroneDeploy, Measure, PrecisionHawk, Skycatch, and Sentera, to name a few.

This past year we also saw an uptick in regulators and industry stakeholder partnerships. For example, the Drone Advisory Committee was created to provide the FAA with advice on unmanned aircraft integration from a diverse group of stakeholders. Major commercial participants include Intel, DJI, Amazon, Google X, and Facebook, as well the Aircraft Owners and Pilots Association.

Consider also the FAA’s new UAS Integration Pilot Program. Here, government entities are partnering with private-sector companies, such as unmanned aircraft systems (UAS) operators and manufacturers, to submit proposals to the FAA to fly more advanced operations in their communities, including flying beyond line of sight and over people. This is significant because it’s clear that regulators want to include industry when creating policies.

However, there is some good news / bad news with this.

The good news is greater flexibility. With vendor partnerships, drones will be able to perform more types of data gathering in a shorter timeframe and with more precision than many other options. So, more aircraft, sensor, and software integration.

The bad news is operators and businesses have regulatory uncertainty. We advise our clients to plan for some uncertainty as technology, the public, and bureaucracy find common ground on operations for beyond visual line of sight and over people.

Challenges ahead

Here’s my list of the major challenges facing the drone industry in 2018:

  1. Regulations: We may see more regulatory red tape—e.g., a patchwork quilt of rules as the FAA’s UAS Integration Pilot Program begins to make policy.
  2. Public sentiment: Basic public concerns still exist about drone safety, security, privacy, and their public nuisance. My question is: How can we overcome this?
  3. Business value: We’ve yet to see credible ROI that hits the executive scorecard. The key question is: What monetary benefit do drones and information gleaned from drones provide shareholder value?
  4. Information accuracy: Up to now, drone vendors have been focused on the accuracy of image capture and the rigor of the drone system. For better business value, they need to focus on the accuracy of the data processing and the rigor of data analysis.
  5. IT data governance: This is especially the case for drone inspections where a single drone could collect 50 to 100 gigabytes of data. Managing these large data sets starts to become one of the things that have to be worked out.
  6. Automation: A lot of software automation will come, including artificial intelligence (AI) or algorithms that minimize the amount of human effort to distill all that information and get to some actionable inference. But large scale industrial use of AI is young and it requires manual intervention to distinguish the difference between near-similar objects.
  7. Endurance: We’re still on the quest for efficiencies like better power sources or mixes.
  8. Widespread business adoption: Business and industry adoption is growing, but it’s mixed because of factors such as business risk aversion, concerns over invasion of privacy, and a reluctance by many companies to share too much information about successes.

That’s it for now.

Listen to the companion podcast here http://bit.ly/2CXe6uK.

Look for a follow-up piece on our specific predictions for 2018, which will include investments, technology improvements, ecosystem partnerships, and software innovations.

If you have questions about what’s in the report I mention or would like to comment, write me at colin@droneanalyst.com.

Image credit: Shutterstock

I believe three of the biggest misconceptions in the drone industry is how fast it will grow, which sectors will grow, and which ones will lag.

No one disagrees that drones—both consumer and professional—represent a new and emerging market. Drone market forecasts abound. We currently track 73 independent companies that provide market forecasts, and each of them projects growth for the drone or unmanned aerial system (UAS) sector that is nothing short of phenomenal. Some of these, however, are questionable, because, at the time they were written, there were no historical sales or reliable market survey data on which to create a proper forecast. We wrote about this problem back in 2015 here. Still, today we still see a big gap between current forecasts and actual purchases, services, and business adoption.

In this article, I’m going to take a look at some of the data collected in our latest report on the drone industry—data we think is important to you and answers the question: “Why don’t we see widespread adoption of drones in my industry just yet?”

Business use defined

As part of our 2017 Drone Market Sector Report, we conducted a survey to identify the business users for drone-based projects and which industries have traction. We define “business users” as those individuals or companies that use or purchase drone-based imaging or sensing services. A total of 623 respondents answered our qualifying survey question that they either do such work themselves or contract out for it.

When we asked respondents about the primary commercial drone-based service they perform or purchase, the results show that:

  • the #1 business use is aerial photography and/or video at 31%,
  • the #2 use is surveying / mapping / GIS with 20%,
  • and the #3 use is construction (design, building inspection, or monitoring) at 6%.

Company size

To gauge the extent of drone use, we asked our business users about their company’s revenue, the number of projects they perform per month, and the number of remote pilots they employ. As with service providers, the numbers are low. For example, 75% of business users perform one to five projects per month.

The revenue figures of business users reveal an interesting trend as well. More than half (53%) are small and medium-size businesses (SMBs)—organizations with less than $10 million in annual revenue. Only 6% could be classified as a large enterprise, i.e., an organization that makes over $1 billion.

As we did with drone-based service providers, we asked these business users how many aviation-authority, licensed small UAS / UAV remote pilots they currently employ. The numbers were smaller than we expected. Almost three-quarters (74%) have five or fewer pilots; 50% have only one.

Certainly these numbers debunk the media hype about drones. There are not hundreds of thousands of drones flying now (certainly not at the same time), nor is it true that Millions More Drones Will Be Flying Above Your Head by 2020 and in this piece we make the case Why the Drone Network of Tomorrow is Farther Away Than You Think.

Limited success stories on integration

Our research finds widespread business adoption is being hampered by a reluctance to share too much information about successes.

Companies are depending on information communicated about drones by others that have been successful. Certainly the interest is there. You can see that from the diversity of industries attending the major U.S. commercial drone expos, such as InterDrone, Commercial UAV Expo, and Drone World Expo (which was just purchased by Commercial UAV Expo). Unfortunately, only a handful of companies (we estimate 75–100) are willing to come forward and present their use cases at these shows. Most of these presentations are not about companywide adoption, but rather about a particular, localized proof of concept.

There are positive messages in which the benefits of drones are explained, but communication about what a successful integration looks like is still very limited. Additionally, we find that companies that are already using drones are reluctant to share too much information, so they can continue to reap the benefits of their early investments. As a result of this reluctance to share information, further integration lags as companies wait on successful user stories that may never appear.

Bottom line

Unfortunately, the media all too often equates the business use of drones with drone delivery, and only reports on the headline-seeking efforts of Amazon, Google, and Facebook. There is so much more that’s actually happening, and it’s getting difficult to generate a comprehensive story on business use. Some of this can be attributed to the fact that many of the major industrial users are starting to focus only on the use cases that matter to them. The most concrete examples of this are the NAB Show, which brings together photography, video, and cinema professionals; the Energy Drone Coalition Summit, which is bringing together the major drone / UAV ecosystem players with the energy industry asset owners and end users; the American Society for Photogrammetry and Remote Sensing (ASPRS), which hosted a pre-conference UAS Technical Symposium this year at the Commercial UAV Expo, and will co-locate with the International LiDAR Mapping Forum in 2018.

That said, we will continue to do research on individual verticals and report growth and adoption issues.

If you have questions about what’s in the report or would like to comment on it after reading it, write me at colin@droneanalyst.com.

Image credit: Shutterstock