Five Biggest Commercial Drone Trends of 2017 and the Challenges Ahead

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Final yr presently, I mirrored again on the information and trends of the commercial drone markets of 2016 and wrote concerning the combined state of affairs forward for 2017. All year long, I provided my perspective on how the drone business was nonetheless motivated by hype and the way assessing ahead momentum required exhausting knowledge on the efficiency of the varied sectors of the business. To that finish, we did analysis over the summer time that surveyed 2,600 respondents on drone purchases, service suppliers, enterprise customers, and software program providers. In September, we revealed the info in 2017 Drone Market Sector Report 2017.

On this publish, I’ll use that knowledge for instance the key tendencies of the previous yr and describe what I feel are the most important challenges forward for the drone business.

Take heed to this companion Drone Radio Present podcast here for the entire evaluation.

Development 1—Progress

By all measures, the drone business in 2017 was marked by vital progress – progress in plane gross sales, software program licenses, the variety of service companies getting into the market, and the variety of industrial companies establishing business operations.

Listed here are a couple of statistics:

  • We undertaking U.S. gross sales in 2017 to be about three.3M models, which is 36% above 2016 figures. That’s all drones, all sizes. It’s about 1.3M models for the >250gram class.
  • As of October 31st, there have been about 837,000 hobbyist customers and 107,000 non-hobbyist drones registered with the Federal Aviation Administration (FAA).
  • As of December 1st, there have been about 66,000 Half 107 FAA Pilots.

This represents an enormous change within the business market since Half 107 laws supplanted Part 333 because the means for business operations within the U.S. What this and our survey knowledge tells us is the variety of service suppliers at present outpaces demand, and consequently, service costs are coming down considerably.

Development 2—Consumerization

We stated in our report that extra shopper drones are getting used for business work than ever earlier than. For instance, our knowledge exhibits that greater than two-thirds (68%) of all drones weighing over 250 grams are bought for skilled functions—both governmental or enterprise.

Why is that this vital? As a result of the influence of consumer-originated know-how on the enterprise is one thing that may’t be ignored. Enterprises need to reap the benefits of highly effective, but easy-to-use merchandise (like DJI’s in style shopper fashions), and put them to work on the job. What this implies for operators or companies is that a shared core know-how advantages all customers and allows corporations to scale the perfect experiences to everybody. Enterprise clients get the added simplicity and usefulness of the buyer product that has been constructed to satisfy the calls for of hundreds of consumers all over the world.  The typical particular person pilot will get to profit from the reliability and scalability inherent within the product and demanded by enterprise customers.

Development three—The DJI impact

Our knowledge exhibits DJI is the clear market chief in drone plane gross sales and virtually each software program class. For instance, DJI is the dominant model for drone plane purchases, with a 72% international market share throughout all worth factors and a fair larger share (87%) of the core $1,000–$1,999 worth phase. Moreover, within the three classes of software program we evaluated, DJI is the market-share chief in two: flight logging and operations, and automatic mission planning.

That is vital as a result of by constructing on prime of its present know-how platform, DJI has fast-tracked improvement and has benefited from economies of scale. By migrating a profitable know-how stack and have set upmarket, DJI by no means has to reinvent the wheel—it simply wants to enhance upon the unique design and save engineering cycles for actual innovation.

The upshot is that to remain related, all the opposite main distributors have needed to associate with DJI (see Development 5 Partnerships, under). DJI’s gross sales success has taken market share from others and has led to layoffs at 3DR, Autel, GoPro, Parrot, and Yuneec. Nevertheless, fears about knowledge safety stay. And this has some speculating about whether or not DJI can maintain its management position sooner or later.

Development four—Investments

In accordance with CB Insights, investments shifted in 2017 from plane hardware to software program. In 2016, there have been 106 offers totaling $542M. Most of those have been for hardware. In 2017, VCs targeted on software program, end-to-end options, and counter-drone know-how. CB Insights tasks the yr will finish with 110 offers totaling $494M. Probably the most vital funding this previous yr was 3D Robotics’ $53M Collection D spherical. It noticed them pivot from hardware to software program providers.

Why is that this vital?  As a result of it exhibits the business continues to be maturing. Seed and Collection A rounds represented 60% of all offers in 2017; whereas early-stage share peaked in 2015 at 73% of offers. Moreover, a few of the most well-funded drone corporations are concentrating on enterprise and industrial inspection.

What this implies for operators or companies is bigger affordability. Software program advances, pc chip manufacturing methods, and economies of scale will proceed to drive down the price of drone platforms and sensors and options.

Development 5—Partnerships

This yr we noticed a change from synergistic merger and acquisitions to the creation of end-to-end options by way of partnerships. For instance, take a look at how DJI’s enterprise partnerships have grown. Think about their AirWorks convention. What drone main vendor wasn’t there? The record included DroneDeploy, Measure, PrecisionHawk, Skycatch, and Sentera, to call a couple of.

This previous yr we additionally noticed an uptick in regulators and business stakeholder partnerships. For instance, the Drone Advisory Committee was created to offer the FAA with recommendation on unmanned plane integration from a various group of stakeholders. Main business members embrace Intel, DJI, Amazon, Google X, and Fb, as nicely the Plane House owners and Pilots Affiliation.

Think about additionally the FAA’s new UAS Integration Pilot Program. Right here, authorities entities are partnering with private-sector corporations, similar to unmanned plane methods (UAS) operators and producers, to submit proposals to the FAA to fly extra superior operations of their communities, together with flying past line of sight and over individuals. That is vital as a result of it’s clear that regulators need to embrace business when creating insurance policies.

Nevertheless, there's some excellent news / dangerous information with this.

The excellent news is bigger flexibility. With vendor partnerships, drones will have the ability to carry out extra varieties of knowledge gathering in a shorter timeframe and with extra precision than many different choices. So, extra plane, sensor, and software program integration.

The dangerous information is operators and companies have regulatory uncertainty. We advise our shoppers to plan for some uncertainty as know-how, the general public, and paperwork discover widespread floor on operations for past visible line of sight and over individuals.

Challenges forward

Right here’s my listing of the key challenges dealing with the drone business in 2018:

  1. Laws: We may even see extra regulatory pink tape—e.g., a patchwork quilt of guidelines because the FAA’s UAS Integration Pilot Program begins to make coverage.
  2. Public sentiment: Primary public considerations nonetheless exist about drone security, safety, privateness, and their public nuisance. My query is: How can we overcome this?
  3. Enterprise worth: We’ve but to see credible ROI that hits the chief scorecard. The important thing query is: What financial profit do drones and knowledge gleaned from drones present shareholder worth?
  4. Info accuracy: Thus far, drone distributors have been targeted on the accuracy of picture seize and the rigor of the drone system. For higher enterprise worth, they should give attention to the accuracy of the info processing and the rigor of knowledge evaluation.
  5. IT knowledge governance: That is particularly the case for drone inspections the place a single drone might gather 50 to 100 gigabytes of knowledge. Managing these giant knowledge units begins to develop into one of many issues that should be labored out.
  6. Automation: A whole lot of software program automation will come, together with synthetic intelligence (AI) or algorithms that reduce the quantity of human effort to distill all that info and get to some actionable inference. However giant scale industrial use of AI is younger and it requires guide intervention to differentiate the distinction between near-similar objects.
  7. Endurance: We’re nonetheless on the search for efficiencies like higher energy sources or mixes.
  8. Widespread enterprise adoption: Enterprise and business adoption is rising, nevertheless it’s combined due to elements comparable to enterprise danger aversion, considerations over invasion of privateness, and a reluctance by many corporations to share an excessive amount of details about successes.

That’s it for now.

Take heed to the companion podcast right here http://bit.ly/2CXe6uK.

Search for a follow-up piece on our particular predictions for 2018, which can embrace investments, know-how enhancements, ecosystem partnerships, and software program improvements.

In case you have questions on what’s in the report I point out or want to remark, write me at colin@droneanalyst.com.

Picture credit score: Shutterstock

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