The Truth About Drones in Mapping and Surveying

According to 2015 statistics from the US Department of Labor, there are 44,300 surveyors in the United States. But mapping is practiced by a larger population of cartographers, topographers, photogrammetrists, civil engineers, and geographers – it’s not exclusive to the surveying industry.  The American Society of Civil Engineers lists more than 150,000 members in 177 countries, and the Imaging and Geospatial Society has 7,000 supporters.  All of these disciplines can be grouped under a broader category called geographic information systems (GIS).  GIS professionals provide a wide variety of land-related services like identifying property boundaries, subdividing land, and surveying construction sites for placement of buildings. They also produce topographic and hydrographic maps, volumetric calculations for stockpiles, and flood insurance maps, among other services.

The number of surveyors is actually projected to decline by two percent from 2014 to 2024 because of improved surveying technology.  Even though surveyors are a fraction of the broader population of GIS professionals, how will the improved surveying technology that is affecting them apply to that broader GIS population? And given the downbeat forecast for surveyors compared with the numerous upbeat billion dollar projections of drone use from the FAA and other industry observers, the question becomes, Where do commercial unmanned aircraft systems (UAS) or drones fit into the surveying technology mix?

With those questions in mind we just completed a study titled “The Truth About Drones in Mapping and Surveying,” The report is the fourth in series of studies that look objectively at each major commercial market for drones and drone technology. This report is co-authored by Bill McNeil, Contributor / Advisor, and Colin Snow, CEO and Founder, Skylogic Research, LLC, and it shows how small drones have been used successfully in surveying and mapping thus far and outlines the lessons learned. It goes on to discuss the opportunities and challenges for GIS professionals, reviews competitive and traditional approaches offered by incumbent technology, and discusses what’s next for drones in this sector.  Here is an excerpt:

“Drones are going to have a major impact on the surveying and mapping industry, but perhaps to a lesser degree on traditional surveyors.  As mentioned earlier, the Department of Labor is forecasting a 2% drop in the number of surveyors from 2014 to 2024.  On the other hand, the Labor Department is projecting 29% growth for the photogrammetry category.  This means more and more photogrammetrists will do surveying work and more surveyors will use photogrammetry tools for mapping.  In other words, inexpensive data collected from drones has and will continue to blur the lines between photogrammetry and mapping.

There is another issue at play here.  The process of physically flying a drone is not unique to map making.  The type of data collected is determined by the instrument payload — not by the drone operator.  In other words, it really doesn’t make any difference if the application is precision agriculture or mapping a pipeline, the deliverables are the information extracted and processed by the crop consultant, the photogrammetrist, or the surveyor.

Drone technology is moving extremely fast.  It’s very possible many surveyors would rather hire a service provider to collect data than invest in a tool that can be obsolete is as little as six months.  They may also consider short-term leases to ensure their technology is relatively current or just rent a drone when needed.  Regardless of how small drones fit into the workflow, they will not only affect the industry, but they will also create new opportunities for independent contractors who, based on their experience, may be able to fly and collect data less expensively than surveyors.  The value add is the knowledge and data processing skills of the surveyor and photogrammetrist, not their drone-flying skills.”

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 colin@droneanalyst.com.

Image courtesy of BZ Media.

Is Esri’s Drone2Map a Game Changer?

Features should appeal to Esri users, but will they appeal to non-Esri users?

THE FACTS:

In June 2016, Esri released an application called Drone2Map for ArcGIS.  Drone2Map (D2M) takes raw image data from drones and creates digital surface models, orthomosaics, 3D-point clouds and 3D PDFs that can be shared.  Data processed by Drone2Map can also be rendered in Esri’s ArcGIS online web service and integrated into ArcGIS for further processing. The photogrammetry engine in Drone2Map is Pix4D.  Esri licenses D2M as a yearly subscription for $3,500 plus a nominal data storage cost.

Esri’s ArcGIS platform provides maps and a wide variety of analytical tools to governments, business, and utilities.  Applications range from finding the optimal retail store location, to mapping pipelines, to planning public works projects.  In the past, Esri has been rather lethargic in adopting new technology, but to their credit, they have been a forerunner in recognizing the potential of drone-generated data. This new product is proof of that.

WHAT’S COOL AND WHAT’S NOT:

If you don’t know Esri, then you don’t know geographic information systems (GIS). ESRI so dominates the GIS industry that the name GIS and Esri are almost synonymous. Esri has been doing business since 1969, has 9,000 employees from 67 countries, 41 offices worldwide, and has annual sales north of $900 million dollars.

More than 350,000 organizations use Esri products, but the number of users is actually much larger because many of these companies have licensed multiple copies of their software.  In other words, Esri’s user base is large enough be a market in itself.  The D2M feature set, combined with ArcGIS integration, should be appealing to current Esri users.

On the downside, Drone2Map only becomes an end-to-end solution when it is used with the ArcGIS platform, making it an additional cost consideration for non-Esri users.  Also, sales of D2M, like other drone data solutions, will be paced by the speed at which drone technology is adopted by enterprises and the data is integrated into the GIS workflow.

THE COMPETITION:

Harris Geospatial Solutions and Icaros, Inc. have formed a partnership that enables Harris to sell Icaros’s One Button imaging processing software.  Like Drone2Map, OneButton generates 2D, 3D, and orthorectified images from drone data.  OneButton may not attract Esri customers, but it will be a compelling alternative for those who don’t use Esri tools.

There is an irony in Esri’s offering—Pix4D is both a supplier to and a competitor with Esri.  Irony aside, we see this as a win/win situation for Pix4D because, being part of Drone2Map, they profit from each Drone2Map sale and from sales to non-Esri customers.

There is another twist in the story here. Esri announced last month a beta integration of its ArcGIS software with the very popular DroneDeploy software. But right now, DroneDeploy offers much more to surveyors and mappers than Drone2Map because it offers a simple mobile app for mission planning, data-to-cloud upload, and the same sharable data analysis (digital surface models, orthomosaics, 3D-point clouds, 3D PDFs, etc.) that Drone2Map does. It seems to us a push-button integration to ArcGIS just makes DroneDeploy more valuable.

BOTTOM LINE:

Drone2Map for ArcGIS is important to Esri because it works on several different levels.  For one, the strong feature set and ArcGIS integration should attract current users. If one half of one percent of Esri’s 350,000 users purchase Drone2Map, Esri will realize a revenue gain of over $6 million.

In addition to generating revenue from their user community, Drone2Map also works as an Esri promotional tool.  Drone companies like 3D Robotics, senseFly, and Drone Deploy all want to promote their solutions as working with Esri products.  This is free publicity and introduces prospects outside of Esri’s user base to the company.

Drone2Map should sell well to the Esri user base but considering the fact that it is not a complete mobile end-to-end solution, Esri will be challenged to successfully find new customers outside their user base.  Also, the commercial drone industry is fast moving and very fluid.  Esri may have a difficult time keeping up.  However, you can never count Esri out.  Once the market settles, Esri will be a formidable competitor.

Image: Esri

This post first appeared on DRONELIFE.com

Market Impact of the FAA Small Drone Rule

Barriers to entry are lower, but high margin operations are still restricted.

THE FACTS:

By now you probably know that the Federal Aviation Administration (FAA) has finally released Part 107, the Small UAS Rule (June 21, 2016), which covers operational use of commercial drones in U.S. airspace. This comes after several years of missed deadlines. You can read the FAA’s own summary of the ruling here. What’s important to note is these rules won’t be implemented until late August 2016.

WHAT’S COOL AND WHAT’S NOT:

There’s not much difference between what was proposed in the Notice of Proposed Rule Making (NPRM) in February, 2015 and the final rule. In a nutshell, the new U.S. rule is a one-size-fits-all approach that allows commercial operators to fly drones that weigh 55 lbs. or less within visual line-of-sight (VLOS) only and without obtaining a pilot’s license but with the requirement that they pass a test.

Our initial February 2015 economic assessment of the NPRM FAA Proposed Drone Rules: Market Opportunity Winners and Losers looked at the business impact and market opportunities the proposed VLOS rules would have for drone manufacturers, distributors, service providers, and investors.  Having read the newly issued Part 107, we stand by our earlier assessment and summarize it here:

  • Precision Agriculture – Winner and Loser

Demand for turnkey drone systems will increase as farmers and service providers work within the rule constraints.  However, the big caveat is drone usage alone will not “transform agriculture” just yet.  For that, we would need to see a change in the adoption rate for variable rate technology (such as applicators) — which is currently down.  Read our in-depth review The Truth about Drones in Precision Agriculture.

  • Inspection / Monitoring – Big Winner

Demand for and use of drones (especially multirotors) dedicated to asset and infrastructure inspection will see a big uptick. The new rule allows you to fly higher than 400 feet above ground level (AGL) if you stay within 400 feet of a structure (such as a 1000-foot tower), so energy, utilities, and telecommunications infrastructure stand to benefit. The rub is you can’t do night operations. So, roof inspections with a thermal camera is limited to almost useless daytime operations.

  • Mapping / Surveying – Winner and Loser

The surveying industry has the most to gain here. The door is wide open for drone operations like stockpile measurement and small open pit mine mapping.  The door is also open for laser scanning, 3D imaging capture, and data processing that architectural engineering firms can consume.  As such, there are new opportunities for dedicated and differentiated cloud-based in-memory processing data services.

  • Film / Photo / Video – Big Winner

Drones have already created new sources of demand for aerial photography, and this will continue in earnest. As with land-based photography, the financial and technical barriers to entry are low, making it easy for businesses to begin offering sUAS-based film and photography services. Now that the regulatory hurdle is low, expect aircraft vendors and specialty retailers to flourish, too.

  • Public Safety / First Responders – Uncertain

Under the proposed rules, demand for turnkey drone solutions and services for police, fire, and emergency medical services is uncertain. Operations at night – perhaps when they are needed the most – are restricted. Technology adoption by fire and rescue may be good, but adoption by local and state police agencies will no doubt be fraught with continued controversy over privacy and Fourth Amendment rights. For more information I recommend you read 3 Things Public Safety Officials Should Know about Drones.

THE COMPETITION:

A lot can be said about how drone leaders and service providers underestimate the power of competitive incumbent technologies (like satellite and manned aircraft). But there is one type of competition in the commercial drone space that doesn’t get talked about a lot, and it’s this: Now that Part 107 has been released, it will lower the barrier to entry for new drone pilots and service providers.

In theories of economic competition, barriers to entry are obstacles that make it difficult to enter a given market. Since the rules have come in as proposed—that is, with no pilot’s license required for the operator—then the barrier to entry for commercial drone services just got lowered.  It’s only natural that we’ll see an uptick of new entrants (they just have to take a test) and we’ll see downward price pressure for services offered.

We see this as a major disruption to the drone service provider market and those already operating under a Section 333 exemption.  These firms will suddenly face more competition, whether their business is real estate photography or infrastructure inspection. There simply will be more drone pilots and more drone service providers, and with that the law of demand and supply kicks in. The more supply you have, the lower prices go.

BOTTOM LINE:

Markets and businesses love regulation clarity – and with Part 107 we now have that.  But we are far away from an inflection point of “drones taking off” — if there is one. The inability to fly over people or beyond visual line-of-sight (BVLOS) restricts some high-margin operations. Because of this, in one sense we have reached a plateau. This rule took a total of 10 years to get. No one knows how long the next one will take.

This post first appeared on Dronelife.com

Six Trends Driving the Commercial Drone Market in 2016 and Beyond

“It’s tough to make predictions, especially about the future.” – attributed to Yogi Berra

I was recently asked in an interview to discuss four or five trends that I see as major drivers in the commercial drone industry today and what manufacturers and service providers might focus on in the future. That sounds simple enough for an industry analyst, but sometimes predictions are as hard as trying determine where that quote came from. It’s not an exacting science, but it’s certainly better than palm reading.

That said, here are six trends I think will drive key opportunities and challenges for drone manufacturers, service providers, and investors for 2016 and beyond. They are:

  1. Fidelity
  2. Sensors
  3. Mobility
  4. China Incorporated
  5. Virtual and Augmented Reality
  6. Competition

Fidelity

One of the major trends we are seeing in the commercial drone industry is the desire for more fidelity – that is, better image and video resolution. This is not just true for commercial drones but also consumer drones.  So, companies like DJI and Yuneec offer integrated 4K video recording cameras and HD video monitoring for as little as $1,200.  And the price keeps going down and the cameras keep getting better.  Add to that component vendors like Amimon that now offer zero latency 1080p downlinks. I could go on, but fidelity is a major driver of technology development for drones and this will continue well into the future.

A lot of this trend is being driven by the consumer. In our homes, we now have 4K TVs, HD tablets, and smartphones with higher and higher resolution, so the expectation is that a drone will deliver that or better.  As I have reported here and here, not all drone manufacturers are moving fast enough to keep up – especially the legacy defense and aerospace ones.

Sensors

In line with the drive for better fidelity is the trend for better and smaller, more lightweight sensors for drones—such as stereoscopic, ultrasonic, LiDAR, infrared, and spectral sensors.  All of these will help drones perform tasks like collision avoidance, 3D imaging infrared thermography, or improved crop vigor analysis.

The chip manufacturers get this, which is why you see companies like Intel, NVIDIA, and Qualcomm making their investments and acquisitions and while we see better onboard imaging and better co-production image processing as the investments kick into high gear.

Mobility

A third major driver in the industry right now is mobility.  I alluded to it above.  In the consumer world, the scales have tipped from PCs and TV to mobile devices.  ZenithOptimedia expects mobile devices—either tablet or smart phone—to become the main platform for viewing online video, reaching 52.7% in 2016 and 58.1% in 2017.

Not only that, but statistics on how the majority of enterprises conduct business processes and transactions is tipping toward mobile devices. IDC predicts the U.S. mobile worker population will grow over the next five years to 105.4 million in 2020 and account for nearly three quarters (72.3%) of the total U.S. workforce. One analyst predicts that by 2017 100% of all customer-facing apps and 75% of all employee apps will be built on mobile platform software first. The ‘enabled mobile worker’ is not just a PowerPoint slide title.  It’s a reality—especially in the field service and maintenance industry where drones are beginning to play a significant role.

What this means for drone manufactures and service providers is that their application development is shifting from desktop to mobile apps and, since there is no clear winner, they’ll have to develop apps that are both iOS and Android compatible and release them simultaneously if they want to stay competitive. But I can tell you most firms are struggling with this—even the big ones like DJI.

China Incorporated

Chinese companies both large and small will be dumping consumer drones on the market either to establish market share or increase it. This year’s CES, also known as the Consumer Electronics Show, was a harbinger of things to come.  It saw booths by many newcomers from China like 9 Eagles AEE, Autel Robotics, Ehang, Hexo, and ProDrone, to name a few.

A lot of these are or will be DJI clones. This is already a fun trend to watch—and one to be wary of as Eric Cheng, former Director of Aerial Imaging for DJI, has pointed out here. The problem is DJI already accounts for over 45% of registered commercial drones in the U.S. as reported here. The only other vendor capable of competing with them based on feature and price is Yuneec.

I suspect, in an effort to save a buck, commercial drone service providers will be tempted to try a clone. Ultimately, they will need to choose a compelling user experience, but given the variety and the number of competing vendors, who has time to learn a whole new technology?

Virtual and Augmented Reality

At the top of MarketWatch’s 2016 predictions: The six tech trends that will rule is the prediction that virtual reality (VR) will shine at the consumer level and augmented reality (AR) will continue to prove itself in the workplace. Virtual reality (VR) already has proven itself in video, and Trace is betting on that horse with immersive 360-degree applications for use in both commercial and consumer quadcopter drones.

But the big money is in AR. Enterprise AR apps reduce workers’ reliance on laptops and tablets where they are cumbersome to use—like in dirty or tight spaces. AR glasses enable field service technicians with a hands-free solution that provides access to visualizations of job-critical information and expert knowledge. SAP has already led the field here. Inspection drones will only add to that benefit since the video feed to the technician is really no different from AR glasses.

Competition

A lot can be said about the power of incumbent technologies (like satellite and manned aircraft) that compete with drone services. And a lot can be said about how drone leaders and service providers underestimate that power, especially in agriculture.  We have written about that topic here, and this video of Young Kim, CEO of Digital Harvest, echoes that.

But there is one part of competition in the commercial drone space that doesn’t get talk about a lot, and it’s this:  What will happen when the proposed FAA rules (aka Part 107) become law in mid-2016? My take is it will lower the barrier to entry for new manufacturers and providers.

In theories of economic competition, barriers to entry are obstacles that make it difficult to enter a given market. The term can refer to hindrances a firm faces in trying to enter a market or industry—such as government regulation and patents, or a large, established firm taking advantage of economies of scale—or those an individual faces in trying to gain entrance to a profession—such as education or licensing requirements.

If the rules come in as proposed—that is, with no pilot’s license required for the operator—then the barrier to entry for commercial drone services gets lowered.  It’s only natural that we’ll see an uptick of new entrants (they just have to take a test) and we’ll see downward price pressure.

We see this as a major disruption to the drone service provider market and those already with a business because they’ve already got a Section 333 exemption from the FAA to operate commercially.

These firms—the ones that operate legally now—will suddenly face more competition, whether their business is real estate photography or infrastructure inspection. There simply will be more drone pilots and more drone service providers, and with that the law of demand and supply kicks in. The more supply you have, the lower prices go.

You can find more of our insights on these SlideShare presentations. I’m always interested to hear your thoughts and insights about the commercial drone market. Comment or write to me at colin@droneanalyst.com.

Image credit: The Fortune Teller, by Caravaggio (1594–95; canvas; Louvre), depicting a palm reading

Five Skills You Need to Succeed in the Commercial Drone Market

These days it seems just about anyone can get an FAA Section 333 Exemption that allows them to legally use small unmanned aircraft systems (sUAS) for commercial purposes in the U.S.  As of October 20, 2015, almost 71% of all Section 333 grants have gone to firms claiming that their primary operation/mission is Film/Photo/Video (and most claim multiple uses).  This includes companies that are using drones for movies, as well as for art and real estate, among other things. Inspection and Monitoring has seen the second highest issuance rate, at 31%, while Mapping and Surveying for land and commercial construction, rounds out the top three at 20%.

Looking further into the data, AUVSI reports that at least 84% — and perhaps as many as 94.5%– of all approved companies are small businesses. While we don’t agree with their astronomical forecast (see our write-up here), we concur with this analysis.

But here’s the catch.  With the bar so low for starting a commercial drone service, what’s the guarantee these businesses will succeed? According to Bloomberg, eight out of 10 entrepreneurs who start businesses fail within the first 18 months. A whopping 80% crash and burn. So given the risk, it makes sense to assess which markets and use cases provide the best chance of success, the skills you’ll need, and the value-add services you should be offering those markets.

Here are five services we think you should consider offering as part of your commercial drone business:

  1. $ – Video
  2. $$ – Mapping
  3. $$$ – Photogrammetry
  4. $$$$ – LiDAR
  5. ??? – Spectral imaging

I’ve put dollar signs next to each service and listed them in progression to represent both the skill and value each has for potential customers. Notice I’ve got question marks there by spectral imaging.  That’s because the jury is still out on whether there is a solid ROI on this service vs. that provided by manned aircraft for precision agriculture.  Precision agriculture often gets touted as the #1 place where “drones will transform the world” but the hard reality is this is a specialized application and a very complex market.  (I have written about this extensively and you can find some very important details in a post I wrote more than a year ago called Film or Farm: Which is Largest Drone Market – Part 2?)

Skill 1 – Video

Now some of you may be wondering why I included video on my list.  We often see drone video footage on YouTube and think it’s cool. But the hard fact is commercial buyers of drone video services have a much higher standard.  So you will, too, if you want to make money in the Film/Photo/Video market.

By now you know shooting good drone video starts with selecting the right drone, the right camera, with the right lens, mounted on the right gimbal.  It’s not a secret any drone enthusiast can go out and buy a DJI Phantom Vision 3 for about $1,200 and shoot 4K video. But just because you can fly it and press the ‘record’ button does not make you a professional aerial videographer.  There is much more to it than that. For one, shooting good video requires you to be skilled in the basics of:

  • Shots (FOV, framing, perspective)
  • Moves (pan, tilt, truck, dolly, etc.)
  • Technique (zoom, action, follow, etc.)

For another, there is timeline editing.  What are you going to do with all that footage?  Hand it to the customer raw?  You could, but it’s better to have it edited or least know how it’s done so you can offer assistance or more services.  For that, you will need to be skilled at:

  • Storytelling / sequencing
  • Cuts
  • Transitions
  • Graphics
  • Lighting
  • Color grading

These aren’t all the things you need to know but if you don’t know these I suggest you get some basic film-school training and offer a better service than the kid next door with a quadcopter and a GoPro.

Skill 2 – Mapping

In researching drones and aerial photography and mapping, you might find yourself coming across new terms. One of the basic ones you should know is “orthomosaic photo” or “orthophotos.”  Orthophotos (aka ‘orthos’) are basically photos that have been stitched together to make a larger one and then corrected.  The technique is not unique to drones.  Orthomosaics have been created by aerial photographers in manned aircraft for years and used by lots of industries.

The point here is if you are not familiar with the techniques and software to create orthos, then I recommend you acquaint yourself with it because it is a valuable service for which customers in the Mapping / Surveying market will pay handsomely. There are even drone apps that automate the whole process like DroneDeploy and Pix4D.

Skill 3 – Photogrammetry

Photogrammetry is a technique which uses photography to measure the environment. This is achieved through overlapping imagery; where the same site can be seen from two perspectives, it is possible to calculate measurements. Again, this technique is not unique to drone imagery, but there is some good news here.  Off-the-shelf software, like Agisoft PhotoScan and SimActive, is plentiful and fairly easy to learn.

The hard part is providing your customer with valuable measurement information.  And the harder part is competing with firms that have been offering this service for years now using ground-based systems combined with aircraft.  For this, you will need some specialized skills and will need to be certified so that you are recognized. One way to get certification is through the American Society for Photogrammetry and Remote Sensing (ASPRS).

An ASPRS Certified Photogrammetrist is a professional who uses photogrammetric technology to extract measurements and make maps and interpret data from images. The Photogrammetrist is responsible for all phases of mapping and other mensuration requirements, which include planning and supervising survey activities for control, specifying photography or other imagery requirements, managing projects for mapping or other mensuration requirements and interpretation. You can find more information on their programs here.

Skill 4 – LiDAR

LiDAR drones are fairly new as the units have become smaller and lightweight.  But LiDAR is not new to surveyors and engineers.  They’ve been using ground-based and airborne LiDAR scanning units for years.

The good news is LiDAR drones are great for scanning small areas like building sites and getting in hard-to-reach areas like under bridges.  In this way they provide a significant cost advantage over aircraft or helicopters with LiDAR units and have the greatest margin potential as a service for the Inspection / Monitoring market.

You can get trained and become a Certified LiDAR Technologist (CLT) through ASPRS.  A CLT is technician who performs routine LiDAR collection support and first-level data processing integrating established plans and procedures.  Find information on that here.

Skill 5 – Spectral Imaging

I put this here last because, as I mention earlier, it’s not clear whether drones provide a significant cost savings to the buyer vs. the same service provided by manned aircraft for the Precision Agriculture market.  There are ROI studies being done now, but most people who provide this service will tell you that farmers aren’t willing to pay much for this service.  Why spend $4 to $5 per acre for you to fly a drone overhead and deliver a normalized difference vegetation index (NDVI) map unless there is a clear return on that investment?  Some will – like growers of high-margin crops like fruits and nuts – but most won’t. Again, this is a competitive market that demands a lot of knowledge about precision agriculture and remote sensing techniques.

I would to hear your thoughts on these skills.  Send me your comments or write us colin@droneanalyst.com.

Image credit: Shutterstock

FAA Proposed Drone Rules: Market Opportunity Winners and Losers

On February 15, 2015, the commercial drone industry breathed a collective sigh of relief. The Federal Aviation Administration’s proposed new rules for small unmanned aircraft systems seemed, at first blush, somewhat practical.  The FAA regulations will eventually allow commercial operations of drones that weigh under 55 pounds in U.S. airspace, without requiring operators to acquire a pilot’s license. You can read the full 195 pages of proposed rules here (hereafter sUAS notice of proposed rulemaking, or NPRM) and some analysis about them here, here, and here.

In this post, I’ll focus on what I think are the immediate economic winners and losers.  My analysis is concentrated on the business impact and market opportunities that the proposed rules have for drones manufacturers, distributors, service providers, and investors.

What do investors need to know?

According to CB Insights data, 2014 investments in the budding drone industry topped $108M across 29 deals. Year-over-year funding increased 104% as venture firms jumped into the drone space with sizable bets. Still, over the past couple of years, I’ve heard VCs and potential investors discussing the FAA bottleneck and questioning whether this was the right time to invest.  Regulatory uncertainty has kept many on the sidelines. But this new clarity should help investors, including those interested in investing in operational and data / information services.

Clarity comes in not only knowing what the rules will look like, but also in the FAA’s commitment to no longer regulate UAS like they do manned aircraft — and in no uncertain terms the U.S. Department of Transportation’s (DOT) understanding of the macro-economic impact of commercial sUAS. In a document captioned Notice of Proposed Rulemaking Regulatory Evaluation, Small Unmanned Aircraft Systems, the author states:

“This proposed rule would create an enabling business environment which would encourage the growth of private sector activity in the manufacturing and operating of small UAS. Therefore, the major benefit of this proposed rule is that it would enable new non-recreational aviation activities for small UAS in the NAS where such operations are currently not permitted without an FAA-issued exemption. The private benefits would exceed the private costs if there is only one UAS and that UAS operation earns a profit.”

As noted here, it’s possible this is a leaked early draft that has since been revised or is otherwise incomplete or inaccurate. [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”][Update: see comment below with link to actual doc] Still, the DOT evaluation explores in depth four potential markets: aerial photography, precision agriculture, search and rescue/law enforcement, and bridge inspection. These fall more in line with what I believe are the proper commercial market segments:

  • Precision Agriculture
  • Inspection / Monitoring
  • Mapping / Surveying
  • Film / Photo / Video
  • Public Safety / First Responders

As I see it, all of these markets are winners, but some are bigger winners than others. The devil is in the details, because success in each market depends what type of sUAS operation the sUAS NPRM allows or doesn’t allow.  The FAA summarizes these operational limitations here, and I’ll discuss each market below.

Precision Agriculture – Winner and Loser

Precision agriculture is a farming management concept based on observing, measuring, and responding to inter- and intra-field variability in crops. Precision agriculture uses detailed, site-specific information to manage production inputs. Information technologies enable segmenting a farm into smaller units to determine the characteristics of each individual segment.

For the most part, the proposed rules support the farmer’s and/or researcher’s ability to locate a precise position in a field, observe it, and create maps of as many variables as can be measured — but only on a small scale. That’s because all observation and measurement would have to be done by a drone that is within visual line of site (VLOS) of the operator. The problem is that fields and farms are big– bigger than VLOS.

Sure, operators could conduct many operations in a day by moving section to section to section and stitching together larger maps, but this is costly – both in terms of manpower and time. Even if it was cheaper, the market potential for drones in precision agriculture still needs more vetting. It’s not yet clear how a sUAS can deliver more usable data to a farmer or provide a cost benefit over the existing manned aircraft or the satellite image solutions available to them today (see Film or Farm: Which is the Bigger Drone Market? – Part 2 for more on this).

Bottom line: Demand for turnkey drone systems will increase as farmers and service providers work within the rule constraints (see my list of drone vendors serving agriculture  here). However, the big caveat is drone usage alone will not “transform agriculture” just yet.  For that, we would need to see a change in the adoption rate for variable rate technology (such as applicators) — which is currently down. So, if you are banking on precision agriculture data services, you will continue to see competition from incumbents and continue to see slow adoption for now.

Inspection / Monitoring – Big Winner

With sUAS’s ability to perform functions like perch-and-stare, video capture, and laser scanning, they are poised to replace many of the dull, dirty, and dangerous functions of inspection and surveillance. The main beneficiaries are civil and public entities that perform enterprise asset management (EAM) and facilities/infrastructure management.

Never is the benefit more evident than in the energy, telecomm, and construction verticals.  For example, the sUAS NPRM mentions power-line/pipeline inspection in hilly or mountainous terrain and antenna inspections (page 8f) as examples of possible operations that could be conducted under the proposed framework.  The DOT evaluation goes further and dedicates a whole section on bridge inspection (section IV.A.1.d. page 21ff). I would add to this structures like buildings, oil rigs, refinery flare stacks, cell towers, and wind turbines.

GIS professionals should pay particular attention to the bridge example. The National Bridge Inspection Standards (NBIS) mandates that routine inspections be performed at 24-month intervals. With almost 600,000 bridges in the United States and 300,000 requiring inspection each year, the DOT evaluation report estimates that about 45,000 annual bridge inspections could utilize some form of small UAS. Multirotors in particular are highly adept at getting into tight spaces.  With advent of smaller/lighter survey grade LiDAR, the combo provides a stable and portable platform for precision scanning of bridges. I think drone products and services that target GIS firms are hot—you can read why here.

Bottom line: Demand for and use of drones (especially multirotors) dedicated to asset and infrastructure inspection will see a big uptick. There is also now a very large opportunity for firms like Accenture and IBM to provide information architecture and data integration services for drone data to existing enterprise and mobile applications like SAP EAM and Oracle EAM.  I also see opportunities for companies to provide motion imagery, video analytics, object recognition, and image metadata processing solutions.

Mapping / Surveying – Winner and Loser

As I mentioned above, the new rule supports the ability to locate a precise position, look at it, and collect the data to create maps on a small scale. Again, that’s because all observation and measurement would have to be done within VLOS of the sUAS operator. The problem here is many mapping projects are bigger than what can be captured in VLOS.  As in the precision agriculture example, operators could conduct many operations and stich together larger maps, but this may be more costly than what can be currently conducted by manned aircraft.

Rules aside, good solutions exist today that support autonomous missions beyond line of sight (BLOS) and therefore create large maps in one flight.  Some investors in this market may be disheartened by the proposed rules that restrict flight to VLOS, since so much effort has been put into autopilot / mission planning / ground control solutions.  Nevertheless, almost all of the existing solutions provide semi-autonomous flight capability where the operator is still in control (or can take back control). You just won’t be able to fly multiple drones at the same time. The proposed rules are one operator, one drone.

Bottom line: The surveying industry has the most to gain here. The door is wide open for drone operations like stockpile measurement and small open pit mine mapping.  The door is also open for laser scanning, 3D imaging capture, and data processing that architectural engineering firms can consume.  As such, there are new opportunities for dedicated and differentiated cloud-based in-memory processing data services.

Film / Photo / Video – Big Winner

The DOT evaluation dedicates a whole section to aerial photography (section IV.A.1.a. pages 16ff).  It says:

“Small UAS industry experts have informed the FAA that a proposed rule could enable a viable market for small UAS aerial photography.  These unmanned aircraft operators would likely specialize in low-altitude aerial photography and video. Consequently, once a small UAS aerial photography market becomes established, it would increase safety by substituting an unmanned aviation operation using a very light aircraft for a more complex manned aviation operation that uses a much heavier aircraft.”

Really? The photographic, film, and real estate industries have known for years small UAS are a more viable and less costly substitute for manned aerial photography.  It’s also no secret that this market is already established and towers above all others both in revenue and number of existing service providers (see what I wrote about that here).

Bottom line: Drones have already created new sources of demand for aerial photography, and this will continue in earnest. As with land-based photography, the financial and technical barriers to entry are low, making it easy for businesses to begin offering sUAS-based film and photography services. Now that the regulatory hurdle looks to be low, expect aircraft vendors and specialty retailers to flourish, too.

Public Safety / First Responders – Uncertain

The DOT evaluation dedicates an entire section to “Search and Rescue/Law Enforcement” (see section IV.A.1.c. page 19 ff).  It describes how small UAS missions can create significant cost savings to federal, state, and local government entities because they offer a more economical alternative to manned helicopters. The report estimates (page 20):

“…a significant number of public entities will contract the services of a small UAS operator. … The FAA and industry expect that some of the larger public entities would train their own operators and purchase and operate their own small UAS. The majority of the smaller public safety departments that could not afford to train their officers to fly a small UAS would contract these services out to commercial small UAS enterprises as the need arises.”

If true, this would create a viable market. But there a few catches. The first catch is the proposed rule does not allow sUAS operations at night. The second is there are or will be local rules to contend with that prohibit certain types of operations, like surveilling criminal suspects.  The third is the recent Presidential Memo creating standards for how government agencies and some recipients of federal funds will address the privacy issues associated with drones.

Bottom line: Under the proposed rules, demand for turnkey drone solutions and services for police, fire, and emergency medical services is uncertain.  Technology adoption by fire and rescue may be good, but adoption by local and state police agencies will no doubt be fraught with continued controversy over privacy and Fourth Amendment rights.

Conclusions

Almost all drone industry insiders expect the clarity about forthcoming rules to foster investment that will create new jobs and spur economic growth — if not now, certainly when the proposed rules become law in 2016 or 2017. Expect then to see increased productivity, improved worker safety, and saved lives.  In the meantime, the FAA wants to hear from you about the proposed rules (see 31 Questions the FAA Wants you to Answer).

I would love to hear your thoughts about the proposed rule for commercial drone use. Feel free to comment or write me at colin@droneanalyst.com.

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GIS: The Biggest Little Drone Market in the World

Last week I had the pleasure of participating in a two-day symposium on unmanned aircraft systems (UAS) hosted by the Northern California American Society for Photogrammetry and Remote Sensing (ASPRS).  The event was held in Reno, Nevada, (otherwise known as “The Biggest Little City in the World”), and its purpose was to assemble UAS experts and enthusiasts to share information, showcase new technologies, and demonstrate systems in action – systems that support geographic information systems (GIS).  Presentations covered a wide range of topics, including everything from vehicles, to software, to data collection, to workflow, cameras, and sensors. You can find my presentation here.

By all measures, this event was a success. With more than 500 attendees, the symposium included presentations on a wide range of topics including vehicles, to software, to data collection, to workflow, to cameras and sensors and an afternoon of UAS demos.  But what struck me most about the symposium was not just the participants’ level of sophistication and knowledge (it was very high), but also the suitability of drones for the mapping and surveying market. In this article, I’ll explain why I think this market will be the second biggest commercial drone market (behind aerial photography and cinema and ahead of precision agriculture) by telling you three things I learned about how GIS professionals see and use drones.

Drones are a perfect fit for GIS – A geographic information system (GIS) lets you visualize, question, analyze, and interpret data to understand relationships, patterns, and trends. GIS benefits organizations of all sizes and in almost every industry. So, GIS professionals, like those who are members of ASPRS, are no strangers to aerial imaging.  They know cameras and aircraft – and surprisingly a lot about drones. When I asked the audience by show of hands how many are familiar with drone technology and have remotely piloted a drone, more than half said they were familiar and had been a drone pilot. This stands in sharp contrast to the audience of the large agricultural drone show I attended over the summer where most attendees had never flown a drone and were unfamiliar with the technology – let alone cameras.

As a profession, most of this audience does photogrammetry.  They are image producers.  As a profession, farmers are consumers of images. For the unschooled, photogrammetry is the science of making measurements from photographs. The inputs are georeferenced photographs.  Up to now these have been taken from manned aircraft or satellites. The output is typically a map, drawing, measurement, or a 3D model of some real-world object or scene. Since photogrammetry is used in fields like topographic mapping, architecture, engineering, manufacturing, quality control, and geology, the accuracy of images matters to these professionals.  What matters to their customers is whether the output is timely, rich, localized, and problem-specific.

So, what better way is there to get all that done than from a drone?  None.  Low altitude small drones provide an advantage over incumbent aerial technology for GIS work.  The images from these drone sensors are more resolute, can be captured more frequently, and cost less to produce.  GIS professionals are willing to spend a lot of money on drone systems — they already spend about $40K for a complete ground-based GPS rover system and more than $100K for 3D laser scanners.  So, the idea of spending up to $100K for a turnkey unmanned aircraft system is not out of line — and drone vendors know this.  That’s why those that exhibited at this event showcased their high-end turnkey systems.

GIS professionals need good drone software – There is a growing interest in and awareness of the economic and strategic value of GIS for the Global 2000, as witnessed by the recent integration partnership between Esri (world’s largest GIS software vendor) and SAP (world’s largest enterprise application vendor). But the race to the top is for the software front end to that enterprise piece. The part that mappers and surveyors use on a day-to-day basis—including  software like work management, flight controls, mission planning, aerial capture, post-processing, and mapping, and modeling.

There were more than 25 software vendors at this show – each with a bit of news.  Some of the most interesting came from DroneDeploy and Google.  DroneDeploy announced the first drone software capable of creating orthorectified maps in real time. Users have typically had to wait for four to six hours for maps to be created from drone imagery, but now they can get real-time aerial maps. This will save operators hours every time they fly their drones, and enable better decisions, as data can now be verified during a flight instead of hours or even days later as is the case with existing systems. DroneDeploy is able to achieve this real-time stitching because the drones its product manages are all internet-enabled and use cloud infrastructure for the processing.

The other interesting news from the event came from Google.  Its soon-to-be-released Earth Engine product can now mix the world’s satellite imagery with UAS images — along with trillions of scientific measurements dating back over 40 years — and make it available online with tools for scientists, independent researchers, and nations. All of whom can mine this massive warehouse of data to detect changes, map trends, and quantify differences on the Earth’s surface. Google has already worked with Skycatch and opened up the engine to other partners, so expect to hear more as they go to full-scale launch.

LiDAR drones are here

Mapping and surveying professionals love LiDAR.  They love it because it allows them to capture minute details that photos can’t — and with those details create precise digital representation of objects, buildings, and the ground. LiDAR is based on the same concept as RADAR, but it uses laser light instead of radio waves. By sending out laser beams in all directions, collecting the reflected energy, and performing some nifty high-speed computer processing, a scanner can create a real-time, virtual map of the surrounding area.  These representations have many uses.

But most LiDAR units are heavy and – up to now – had to be mounted on trucks or manned aircraft.  So over the past couple of years manufacturers like Riegl and Velodyne have reduced the size and weight of their units such that that it’s now possible to mount them on large multicopters.  Additionally, these same vendors sell or partner to sell their own dedicated drones, thereby ‘vertically integrating’ (no pun intended) their scanner offerings.  By coupling novel drone-mounted LiDAR systems with vision cameras, advanced computer processing, and GPS, it has become possible to create a remotely piloted flying LiDAR scanner. These vendors were at the show as was Phoenix Aerial Systems and XactSense, both of which have LiDAR drones.

What’s next?

What will be the next innovation for this market?  Well, maps of navigable drone highways in the sky, for one.  These would be aviation maps that would help pilots of manned aircraft know where not to fly. This BHAG is already being taken on by SkyWard, which just introduced the Urban SkyWays Project and the first end-to-end demonstration of a commercial drone network operated with full regulatory compliance. After that? Who knows.  One thing is certain: I expect to see the vendors that attended this symposium continue to innovate in big ways.  Stay tuned.  In the meantime, feel free to write me at colin@droneanalyst.com and tell me what you think about the market opportunities.

This post also appears in sUAS News ‘The Market‘.