Posts tagged "market research"

We just announced the release of our latest research on commercial drone operations. The Economics of Using Drones for BVLOS Inspections is a white paper sponsored by PrecisionHawk, the leading provider of drone technology for the enterprise, which provides a foundation for businesses to evaluate when it’s best to use traditional ground and manned aviation, line of sight drones, or BVLOS (for “beyond visual line of sight”) drone inspection approaches. It’s designed as a comprehensive primer of drone inspections in specific industries.

The paper answers questions like:

  • What’s the best way to enable an effective drone strategy?
  • What are the economic benefits of operating drones?
  • What are the costs, benefits, and risks of using drones for BVLOS operations?
  • How does that compare with traditional inspection methods?

Here is an excerpt:

As the commercial drone industry continues to evolve, widespread BVLOS drone inspection has the potential to significantly change business models for oil and gas, utilities, insurance, and other industries. Representatives we spoke with in those industries point to four main drivers motivating them to explore BVLOS operations:

  • Safety, as in preventing fatal helicopter crashes or accidents from having to manually climb towers to take readings;
  • Costs, or reducing dependence on a $1,500-per-rotor-hour helicopter and personnel and even cutting the time and expense of the multiple flights needed in flying drones within visual line of sight (VLOS);
  • Data inconsistency and lack of quality, since manual data collection sometimes involves photos taken from a helicopter traveling at speed and at different heights for each flight—which leads to inconsistency—or hand-written notes taken while visually inspecting with binoculars—which leads to imprecise or poor quality data;
  • Time to value, meaning that BVLOS flight can cover a wide area and collect high-quality data much more quickly than traditional means, so, for example, insurance claims of total loss can be indemnified faster.

The 21-page report also provides a guide for when—and how—to deploy drones to inspect assets, use cases for how drone missions compare with traditional methods, and insight from PrecisionHawk’s customers about how they’re refining their inspection strategy—and their results.

You can register to get the free report here: http://bit.ly/2Rn8z6y

Image credit: PrecisionHawk

This post first appeared in Forbes

In many ways, 2019 will be another big year for the commercial drone industry. Last year saw a wider rollout of the FAA’s LAANC program (the Low Altitude Authorization and Notification Capability that provides access to controlled airspace near airports), the launch of the UAS Integration Pilot Program from the FAA, and some significant developments for new regulatory frameworks for drones in Europe and in India. This year, expect more of the same—but with a few twists.

Trend 1 – Expanded business use

Adoption of aerial drones and drone technology will not be as widespread as some might expect. Instead, it will grow in select industries like agriculture, construction, insurance, mining and aggregates, public safety and first responders, oil & gas, survey engineering, telecommunications and utilities.

Last year, companies began to move beyond the provisional use of drones—where they were outsourcing to determine a drone program’s feasibility—to standing up or expanding internal teams to manage workflows and data. This year, expect to see reports about companies expanding their teams and adding use cases that take advantage of the waivers allowing limited beyond visual line of sight operations.

Trend 2 – Slower, more steady growth

The number of certified remote pilots is the benchmark for commercial drone industry growth. That’s because, almost uniformly around the world, regulations demand each drone operation have one pilot. Last year, the number of FAA-certified remote pilots grew about 50% over the previous year, to approximately 115,000. That increase was mostly made up of pilots who work for companies, enterprises or public agencies with internal drone programs as opposed to pilots who operate for drone-based service providers. It’s clear that commercial industries are now driving growth rather than individual interest as in years past.

One thing to keep in mind when looking at FAA numbers is that the month-over-month growth rate is beginning to slow. That may worsen given the current partial U.S. Government shutdown, which will delay the grant of new certificates. It may also slow further because some drone-based service providers who are not making money (most aren’t) will choose not to re-certify as a remote pilot.

Trend 3 – Further vendor consolidation

Much of the industry’s growth so far has come from the early hype about how drones were going to “transform” industries as well as huge forecasts that fueled investment. Over the years, we’ve seen those dreams turn to smoke as vendors like 3D Robotics and GoPro fell out of the sky. Last year was no exception. The $118M collapse of Airware and the release of Parrot’s disappointing financial results give us a glimpse into what will come.

Still, there is good news, and you can expect more moves like PrecisionHawk’s acquisitions as vendors seek leadership positions in key industries and secure new revenue streams.

Trend 4 – Public distrust and civil liability

Despite the benefits of commercial drone use, the general public still has concerns about drones with regards to safety, security, privacy and public nuisance. After the Gatwick debacle, expect more headlines in 2019 of unauthorized drone sightings and the coming drone apocalypse. In many ways these stories hurt legitimate commercial operators who often need to gain permission from reluctant land owners so they can perform inspections and survey maps for infrastructure unreachable by other means.

Here in the U.S., there is another tea kettle about to boil over. A little-known but highly influential group known as the Uniform Law Commission (ULC) will continue to work on a proposed “Tort Law Relating to Drones Act,” which concerns drones and privacy. If their proposal is adopted by states, we could see an arbitrary line drawn 200 feet in the sky that would establish a new aerial trespass zone giving property owners the right to establish no-fly zones. Right now, their draft goes much further than any existing state or federal law and, if enacted, would create a complicated patchwork of differing state laws that inhibit commercial operations. Until then, expect to see more local and state laws like this one in Pennsylvania aiming to protect people’s privacy from drones.

Trend 5 – More regulation – maybe

Some predict 2019 will be the year the FAA finally implements a requirement for remote identification for all drones, recreational and commercial, flying in the U.S. It’s expected this will be combined with a new rule for flights over people for small drones. But there is a big difference between the FAA proposing a rule (called the Notice of Proposed Rulemaking or NPRM) and that rule becoming law. The difference can be anywhere from six to nine months. So it’s likely we’ll see a proposed rule, but implementation will be like Waiting for Godot.

To be clear, Drone ID is not a slam dunk, and the specifics of the ID signature are still being debated within the FAA. Even so, Drone ID needs to exist for Unmanned Traffic Management (aka UTM) to become a reality. UTM should help enable some of the most talked-about use cases for drones, from package delivery to aerial taxi services, but don’t expect this first iteration of remote ID to live up to the headlines or vendor expectations of a global autonomous drone network – as that would ignore the arduous political processes in each country or region to make UTM even possible.

Trend 6 – DJI’s continued dominance

SZ DJI Technology Co., Ltd. (a.k.a. DJI), a Chinese company, continues to dominate the market and has made gains this year in every product category, from drone aircraft at all price ranges, to add-on payloads, to software. Recent survey data shows DJI is still the dominant brand for drone aircraft purchases, with a 74% global market share. Much of DJI’s dominance can be attributed to its aggressive product development, technological advancements and partner development in the enterprise channel. Last year, the company released two new series of enterprise products (Phantom 4 RTK and Mavic 2 Enterprise) that target industrial users. It’s safe to predict their leadership will continue given their strategic investment with Hasselblad, their recent investment in an R&D facility in Palo Alto, California, and their partners in the enterprise space such as Microsoft.

Trend 7 – Sensors, software, and AI advancements

Along with the new imaging sensor integration announcements in 2019 (such as smaller, more lightweight LiDAR), expect to see imaging software advancements as companies seek to combine RGB, thermal imaging, orthomosaic, and data from IoT sensors. More aerial imaging and mapping software firms will likely announce artificial intelligence (AI) capabilities. Right now, most of this is cloud-based machine learning (a.k.a. deep learning and predictive analytics), where datasets are trained by specialized teams. Already, there are some drone-based AI solutions for image recognition/machine vision, but it’s still early in the technology development cycle and AI is near peak hype.

Some big news for 2019 could be workflow integration of drone data and workflow into predictive maintenance and service solutions, as well as enterprise asset management systems such as those from IBM, INFOR, Oracle and SAP. Capabilities could include documentation, tracking and GIS data integration. That may bring a yawn to some, but when you can connect the dots and show the effect of drone data on the balance sheet, CFOs and CEOs will take notice and drive further enterprise adoption

Image credit: Mark Kauzlarich/Bloomberg

This was a big year for the commercial drone industry as a whole. It saw a significant increase in the business adoption, the expansion of the FAA’s LAANC program (the Low Altitude Authorization and Notification Capability that provides access to controlled airspace near airports), the launch of the UAS Integration Pilot Program from the FAA (aka IPP), new products like the Phantom 4 RTK from DJI, and some significant developments for new regulatory frameworks for drones in Europe and in India.

In this post, I’ll illustrate some of the market trends over the past year using data from our third annual drone industry benchmark report and describe what I think shaped the drone industry.

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

If I was to distill the key forces of 2018 on the drone market into three things, I would say they are:

  1. Business adoption
  2. Vendor contraction and expansion
  3. The DJI effect

Force 1 – Business adoption

Adoption of aerial drones and drone technology was not widespread, but it did grow in select industries such as insurance, utilities, construction, and survey engineering,

In 2018, we saw companies begin to move beyond the provisional use of drones—where they were outsourcing to determine a drone program’s feasibility–to standing up or expanding internal teams to manage workflows and data.

You can see this trend, particularly in the U.S. when you realize the growth in the number of certified Part 107 remote pilots. The U.S. began the year with about 74K certified remote pilots, and as of the end of November, we had about 112.5K. So we’ve added about 38,500 pilots this year. That’s a 50% increase over last year.

The thing about this increase is that it’s mostly pilots who work for companies, enterprises, or public agencies with internal drone programs.  We saw this trend in the data from our annual benchmark survey conducted over the summer.

Force 2 – Vendor contraction and expansion

There were some winners and losers this year in the race to gain more customers and satisfy investors.

Probably the biggest contraction story was the $118M collapse of Airware. Fortunately, Delair acquired Airware’s software solution, which ensures the continuity of service for existing customers and dealers. The agreement also included keeping the team from construction and mining specialist Redbird, which Airware initially bought in 2016.

The other contraction was from Parrot. Earlier in the year, Parrot released its ANAFI work drone for the commercial drone market. But then just last month, Parrot’s CEO announced disappointing financial results because of what he called “a significant consumer drone market contraction.” Suffice it to say they are running on thin cash flow, and it will be interesting to see if there will be a right-sizing of Parrot and its affiliates like senseFly and Pix4D in 2019.

Another big move this year was PrecisionHawk’s acquisitions of both HAZON and InspecTools. These businesses specialize in inspection services and technology for the energy sector. They bring PrecisionHawk the domain expertise that will enable tighter integration between collecting and analyzing drone data—something customers want. We think these acquisitions position PrecisionHawk as a leading service provider for companies wanting to perform asset inspections—specifically those companies in the oil & gas, insurance, and utility industries that need beyond visual line of sight (BVLOS) operations. If you recall, PrecisionHawk was part of the FAA’s Pathfinder Program, so they have extensive experience in BVLOS ops.

Force 3—The DJI effect

You can’t talk about the drone industry without mentioning market leader DJI. The company 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. Our 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.

DJI’s current global market share is two percentage points higher than it was last year (72%), and is a significant change from 2016, which showed them with 50% market share.

On that note, many industry and UAS news pundits speculated that security concerns about DJI small drone aircraft would be the death knell for DJI (a China-based company), but clearly these fears did not affect their sales. To stem concerns about DJI’s data security practices, the company hired a forensic investigation company, Kivu Consulting, Inc., to independently review DJI’s UAV data transmission and storage practices. Kivu’s analysis of the drones and the flight control system (drone, hardware controller, GO 4 mobile app) concluded that users have control over the types of data DJI drones collect, store, and transmit.

As I’ve have noted in our report, much of DJI’s dominance can be attributed to its aggressive product development, technological advancements, and partner development in the enterprise channel. DJI’s leadership role existed as early as 2015, when we looked at FAA data on commercial drone registrations. The company continues to release new product after new product, and it leads other manufacturers with technology and enterprise ecosystem partnerships.

We predicted last year that this would continue well into the future, given their current lead, their strategic partnership investment with Hasselblad, their recent investment in an R&D facility in Palo Alto, California, and the continuation of their AirWorks Conference enterprise partner ecosystem event.

That’s it for now. Look for a follow-up piece on our specific predictions for 2019, which will include investments, technology improvements, ecosystem partnerships, and software innovations.

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

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

If you can’t measure it, you can’t improve it.” – Peter Drucker

The $118M Airware failure is a cautionary tale for all potential commercial drone investors—as well as all existing commercial drone market participants. To avoid such failure—whether you are drone aircraft manufacturer, software vendor, service provider, business enterprise, investor, or public agency—you need the most reliable market data possible—not just best guesses.

I still believe the #1 misconception in the drone industry is how fast it will grow, which sectors will grow, and which ones will lag. As early as 2014, we wrote about this problem and warned about using unreliable data to measure the potential market for drones. Back then I said drone market forecasts abound. At that time there were 22 independent companies providing market forecasts, and each of them projected growth for the drone or unmanned aerial system (UAS) sector that was nothing short of phenomenal. Today there are 84, most still projecting remarkable growth.

Our observations:

  • We see a lack of objective information on drone industry market segments.
  • We find there’s an absence of credible market-based research.
  • We see little understanding of the difference between large industry forecasts and actual business user adoption rates.

Example of success

Despite the big disconnect, there are some big success stories in dronelandia—successes that can be attributed in great part to managing with good data.

Take DroneDeploy, for example. They report over 30,000 users that log over 65,000 flights per month. These users have mapped over 250,000 sites and uploaded more than 75 million images in the last 12 months.

By our accounting (results from our 2018 benchmark survey of over 2,500 drone industry participants), DroneDeploy has the #1 market share for agriculture and construction in automated flight / mission planning and data / image / video processing—despite having 16% and 12% overall share in those two software categories, respectively. All vendors continue to push out innovations, but it’s DroneDeploy that’s pushing boundaries more than any vendor. Their app market is the largest set of industry-specific integrated apps available.

How did they get to be so successful?

DroneDeploy operates in one of the most crowded segments of the commercial drone market—software. We track over 130 vendors servicing the two software categories in which they compete. Last year our data showed they lead with more agriculture industry market share than anyone but lagged in construction. This year, however, they targeted construction, and the results show it.

One reason for DroneDeploy’s success is they were able to track their results with data—data that we provided from custom queries tailored to their objectives that were included in their research sponsorship over the past two years.

Bottom line

The quote by Drucker above means that you can’t know whether you are successful unless success is defined and tracked. With a clearly established metric for success, you can quantify progress and adjust your process to produce the desired outcome. Without clear objectives, you’re stuck in a constant state of guessing.

If you have questions about how we can help you make critical investment decisions with confidence, write me at colin@droneanalyst.com.

Image credit: Shutterstock and Skylogic Research

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

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

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

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

We just announced the start of our 2017 Drone Market Sector Research, which promises to be the most comprehensive study of drone market trends and usage to date. The online portion of this research seeks to get your opinions about buying and using small unmanned aircraft systems—otherwise known as drones This independent research is being underwritten by Airware and DroneDeploy and 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.

Why are we doing this?

Because we believe the consumer and commercial drone market needs it. Our observations:

  • We see a lack of objective information on the drone industry.
  • We find there’s an absence of credible market-based research.
  • We see little understanding of the difference between large industry forecasts and actual buyer adoption rates.

The survey will explore:

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

Who should take the survey?

  • Individuals or businesses who have purchased a drone in the past 12 months for any reason
  • Commercial drone service providers
  • Businesses that use drones or drone services as part of their company’s internal work or projects

Take the brief 10-minute survey here: https://www.surveymonkey.com/r/2017_drone_market

As an incentive for your 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 (a $400 value) or one of two $100 VISA gift cards.

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

  • Critical industry drivers
  • Vendor and service provider market share
  • Business adoption trends and issues
  • Market size for all drones and growth projections by segment

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

As always, I’m interested in hearing from you.  If have questions or comments, feel free comment below or email me at colin@droneanalyst.com.

Image: Shutterstock and Skylogic Research