Commercial UAS Market Opportunities: Do defense avionics and electronics suppliers have a head start?

This post also appears in The Market section of sUAS News.

As the Federal Aviation Administration prepares new guidelines for the use of unmanned aerial systems (UAS) in the U.S. national airspace, startups and aeronautic mainstays are chomping at the bit to start selling drones for commercial ventures, from filming to crop scouting to inspecting oil pipelines.  Some market forecasts like this one from Markets and Markets and this one from Business Insider expect the size of the commercial market for sUAS to grow significantly over the next decade. I believe they are right, but what is up for grabs is, Who will get the lion’s share of the market?  Will it be the startups like Airware and PrecisionHawk or the defense suppliers like Lockheed-Martin Procerus Technologies and AeroVironment?

I recently came across this this article in Military Embedded Systems and was struck by some of the comments.  The article starts with this assertion:

“Most analysts expect the commercial market for unmanned aircraft to eventually dwarf that of the military market. Unmanned aircraft systems have changed the face of modern warfare and created a huge opportunity for electronics suppliers that provide systems for the UAS payloads, ground control stations, and flight controls.”

It goes on to quote Ron Stearns, Research Director at G2 Solutions:

“Companies who will have the biggest head start in [fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][the commercial UAS] market will be defense avionics and electronics suppliers who have been there and done that with this technology,” he continues. “However, it is a very different operating space for them, akin to a purely commercial electronics company trying to sell in the military procurement realm.”

What struck me first is the assertion that the commercial market for UAS will dwarf that of the military. Neither the Markets and Markets or Business Insider forecasts show that.  Business Insider is perhaps the most rational, as they predict that 12% of an estimated $98 billion in cumulative global spending on aerial drones over the next decade will be for commercial purposes.

Second, there is little evidence that those same suppliers that benefited from military drones will benefit from the eventual commercial applications of this technology.  It is not – as the Military Embedded Systems article suggests – an R&D problem.  I believe the vast differences in the ways these firms go to market is the problem that will, in fact, “throw a wrench in that transition.”

As background, I suggest taking a look at a piece I wrote back in March 2014; The Business of Drones: A Tale of Two Cities lays out the issues and the advantages of each camp. Since that time, I have attended the Precision Aerial Ag show and Ohio UAS Conference and witnessed the advancement of off-the-shelf open source technology and the go-to-market practices of commercial UAS aircraft produced independent of government contracts or sub-contracts.

Third, I see no evidence that supports the claim that defense avionics and electronic suppliers have the biggest head start. In fact I see just the opposite.  Take, for example, the software platform that runs small UAS for commercial use. You would think that when NASA solicited collaboration from outside organizations for its UAS Traffic Management (UTM) research and development to enable sUAS operations at lower altitudes, Lockheed-Martin would have jumped at that opportunity.  After all, they are an existing NASA contractor, and their Kestrel 3.0 autopilot avionics technologies incorporates data from a suite of sensors and GPS to create an accurate estimate of the vehicle’s location and orientation.  They also make the Stalker UAS, which is the same size and weight class as many enterprise level sUAS like the PrecisionHawk Lancaster.  But they didn’t.  Instead, San Francisco startup Airware answered the call.  You can see that announcement here.

NASA plans to test UTM capabilities to safely enable low-altitude operations and operational requirements for wind/weather integration, airspace design/geo-fencing, sense-and-avoid/separation management, demand/capacity imbalance management, contingency management, and enabling requirements such as communications, navigation, and surveillance. The outcome of this research is bound to impact the future market for sUAS technology in the commercial markets, and collaborating parties will receive valuable performance data about their assets and ability to operate in the mixed airspace. In this regard, I think Airware has the head start.

There are other examples of where non-military vendors – especially those in Silicon Valley – have surpassed their military counterparts. Look for those in future “The Market” articles. In the meantime, feel free to write me at colin@droneanalyst.com and tell me what you think—will startups or defense contractors get the lion’s share of the commercial sUAS market? Or another party?

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When Lockheed Meets GoPro: Ohio UAS Conference Wrap Up

Over the course of three days in August, I along with more than 670 participants at the Ohio UAS Conference 2014 in Dayton, OH, witnessed a large number of government and aerospace company attendees interested in taking drones into commercial markets.  From the dozens of presentations and interactions I had with academics, military contractors, aircraft manufacturers, parts suppliers and many others at the event, it’s clear that government and aerospace have jumped on the drones-for-commercial-use bandwagon.  But, for a number of reasons, this group’s aircraft aren’t going commercial just yet.

To be clear, the Ohio show was about showcasing proof of concepts and building partnerships – not flying and getting customers. This stands in stark contrast to the Precision Aerial Ag Show I attended earlier this summer, where many vendors demoed their aircraft and showcased their customers and established relationships with local service providers.

Why the dissimilarity?  Part of the difference is in approaches to FAA regulations.  The aerospace and military contractors play it safe by following all the FAA guidelines — regardless of which airspace they fly or test in.  But commercial vendors, whose aircraft and commercial applications are intended only in Class G uncontrolled airspace approach FAA guidelines as just that—guidelines. I wrote about these “radical opposites” in The Business of Drones: A Tale of Two Cities.

What I found interesting about the Ohio show is that it revealed evidence of a closing gap between commercial and public sector approaches to drones. I see a trend in which aerospace companies are beginning to adopt model aircraft and consumer technology. Let me explain by telling the story of three vendors I saw.

Detroit Aircraft – Where Lockheed Meets GoPro

Thanks to Detroit Aircraft, I got my first hands-on look at Lockheed Martin Indago VTOLLockheed-Martin Indago VTOLDetroit Aircraft is an authorized distributor of the Indago. And it is one sleek, sophisticated machine. It is perhaps the most highly engineered quadcopter system ever built. And you would think so given Lockheed’s deep R&D pockets and experience with programs like Desert Hawk, Persistent Threat Detection System aerostats, and the K-MAX unmanned helicopter system.

But the Indago wasn’t engineered for those same purposes nor by those groups.  Rather, it was created by Procerus Technologies, a company Lockheed Martin acquired in 2012.  The target market for this system was to be public safety / first responders and compete with the likes of the Aeryon Scout and Draganflyer Guardian.

For the most part, the $45K Indago system is capable for first-responders.  The copter is compact, lightweight (5 lbs.), and folds up, so it’s packable.  It’s enclosed, so it’s all-weather. It’s got a removable two-sensor gimbal (video and infrared), an IP-based digital video and data link, a hand controller and/or full ground control station, zoom-in video monitoring, and much more.  It seems the engineers thought of everything – including putting a GPS on the hand controller so the copter can ‘follow me’ wherever it goes. But they missed a big feature. The Indago lacks pretty standard video recording capabilities — capabilities that you find on a point-and-shoot camera and hobby store quadcopter. There is no onboard HD video recording, no live stream HD, no stabilizing gimbal for the camera, no HD 1080p / 60 fps recording, and no still photography for photogrammetry or near-infrared image capture.  Bottom line: What you see and record on the downlink monitor is irresolute shaky video.  Oh my.  That’s four years behind.

Not to worry. Enter Detroit Aircraft. When they got a hold of the Indago, they realized these shortcomings straightaway.  The first order of business was to engineer a 2D gimbal mount and video feed for a GoPro HERO camera. At least now you can record stabilized HD video. They also affixed a consumer camera and an infrared trigger for photogrammetry.  More is being done.  As this firm continues testing and integration you can expect Lockheed Martin to catch up with off-the-shelf model aircraft technology.  For more on nuances of modern aerial photography see this post.

Camo LLC – Testing Open Source. 1, 2, 3

Nobody wants drones to collide with each other – let alone collide with manned aircraft.  So, you have to test prevention systems to see if they work.  Camo is doing that.  Camo LLCAs ‘system of systems’ subject matter experts, their discipline and attention to detail make them ideal candidates for this. They do test and analysis planning, execution, and reporting for integrating war fighting systems.  In layman’s terms, that means they test all the individual sub-systems to make sure they talk to one another.

Systems of systems engineering is much needed if we are to see large-scale integration of commercial drones into controlled airspace.  Camo is well equipped for testing the integration of ADS-B with autonomous flight controllers – which they are doing.  ADS-B or ‘automatic dependent surveillance – broadcast’ is a cooperative surveillance technology in which an aircraft determines its position via satellite navigation and periodically broadcasts it, enabling it to be tracked. The information can be received by air traffic control ground stations as a replacement for secondary radar.  It can also be received by other aircraft (or drone) to provide situational awareness and allow self-separation.

But here is the news. They are testing SkyGuard ADS-B on a Mentor-G fixed-wing model aircraft.  The auto-pilot flight controller is open source APM 2.6 by 3DRobotics.  Their flight is Mission Planner which is also open source.  What gives?  Why would a military vendor be testing on model aircraft and open source technology?  Well, for one thing, cost.  It’s cheaper than licensing a proprietary system and in some cases it’s just simply a better choice.  Open source drone software has in some ways become more functionally mature than its military counterpart.  As I said above, this is a new trend. You can find out more on open source drone technology here.

SelectTech Geospatial – The Monster Garage of Drones

SelectTech Geospatial (SG) has the local reputation of being the ‘Monster Garage’ of UAS. The Monster Garage TV series used to assemble a team of people with mechanical, fabricating, or modifying expertise to modify a vehicle into a “monster machine.” This generally meant making one vehicle that could transform into another. While the soberness of such designs was many times in question (such as when a police car transformed into a donut shop), the ingenuity of the engineering was not.  Such is the case with SelectTech.  This engineering and technical services company started as a rapid prototyping manufacturing service for military hardware and systems and soon realized the market potential for drones doing civil geospatial applications services.  SG is located at the Springfield Beckley Municipal/Air National Guard airport in Springfield, OH.  The facility is a renovated 17,000 sq. ft. hangar capable of high tech engineering and design, software development, prototyping, manufacturing and production, product validation and extensive flight testing.

At the conference, they exhibited some of their unique monster machines – like this aircraft Convertible Fixed Wing Quadcopterwith a removable fixed wing that allows it to be transformed into a multirotor quadcopter.  What they didn’t show was this UAS designed and built back in 2011 with the help of a 3D printer. This was the first non-government-built aircraft of its kind. It has a wingspan of four feet and weighs about five pounds. Powered by an electric motor and lithium polymer batteries, it flies in winds in excess of 25 knots. But here is the news.  The initial flight trials were made at the Springfield-Beckley airport under The Academy of Model Aeronautics (AMA) flight rules – not under FAA rules for Certificates of Waiver or Authorization (COA) or Special Airworthiness Certificate (which are normally required for UAS aircraft). So, basically, it is an advanced model aircraft and one more example of an aerospace company adopting model aircraft and consumer technology.

Wrap-up

To reiterate a point I made in this post, aerospace firms and military contractors have to a great degree been naive about the power of what a model aircraft drone can do commercially and how overpriced military-spec drones are for the civilian market.  It seems that trend is changing and with firms like the three I mention above, this convergence of technology will continue.

As always, feel free to comment or you have questions and would like to discuss any of this one-on-one, email me at colin@droneanalyst.com.