Making the Business Case for Your Drone Program

I am happy to announce the release of Making a Successful Business Case for Drone Technology – a blueprint for enterprises to develop a successful business case for a drone-based technology program. Produced in partnership with PrecisionHawk, this reference guide offers enterprise leaders a clear, step-by-step process to analyze, evaluate, and communicate key objectives of a drone program to ensure company-wide adoption.

The guide is designed to provide specific guidance for operational managers. It covers a variety of business case topics like setting short and long-term goals, documenting costs, assessing the business impact, and communicating drone program benefits. Organized so you can consume only what you need, this guide provides a generic business case template as well as business case examples, both of which you easily adapt for your specific needs, company, and industry.

Here is an excerpt:

Adopting a new technology is naturally complicated—from gaining executive buy-in to implementation and training, to ensuring the technology delivers on key objectives. Process oversights, inconclusive value assessments, insufficient support from the right parties, and general delays can derail the project and de-motivate even the most experienced operational manager. A strong and complete business case can make all the difference.

The purpose of a business case is to outline the rationale for adopting new technology–in this case drones–and provide a means to continually assess and evaluate the project’s progress. A good business case needs to address key concerns for executives and peers, but in general, should answer four basic questions:

  1. What is the project’s goal?
  2. How do we reach the goal?
  3. What type of change is required?
  4. What’s the degree of certainty this solution will solve the problem?

A business case typically has much more detail than a project proposal and should be reviewed by key stakeholders before being presented to executive decision-makers. Preparing the business case involves assessing a business problem or opportunity, identifying the specifics of the drone technology solution, and understanding the benefits, risks, costs (including an investment appraisal), implementation timeline, impact on operations, and the organization’s ability to deliver the outcomes. Ultimately, your business case needs to both articulate the problems with the current situation and demonstrate the new business vision’s benefits.

The guide goes on to offer solutions for these and other issues, including short and long-term planning, gaining executive buy-in, documenting costs and assessing the business impact, ultimately ensuring that the resulting drone program’s objectives are aligned with the impact on a business’ bottom line.

The full reference guide, including sample business cases and planning frameworks, can be found on our partner’s website here:  http://bit.ly/2zj7vua

 

Image credit: Shutterstock and PrecisionHawk

Drones Are Doing More In U.S. Than You May Know, As These 3 Companies Show

Five years ago, the pundits predicted that by now we would be seeing tens of thousands of drones buzzing over our heads delivering everything from pizzas and burritos to the latest “must-have” item from Amazon. So what happened? Where are they? In a nutshell, they are here, but the general public doesn’t see them—at least not daily—and they aren’t necessarily delivering what was predicted.

The fact is that commercial drones fly in remote areas or over private property every day by the thousands. They’re performing work on farms, powerlines, construction sites, cell towers, and oil pads, especially in the U.S. where there are more than 118,000 FAA-certified remote pilots. Compare that to the U.K., where there are just under 5,000.

Delivering pizzas and burritos will likely be a very small part of what drones will be doing in the future. According to the largest benchmark study on commercial drones, the bulk of all current industrial use outside of film, photo and video falls into two categories: surveying and mapping land areas and inspecting and monitoring physical structures. And it’s these two uses that will continue to drive the growth of drones for industrial use for many years to come.

Three companies represent this growth and are worth getting to know: PrecisionHawk, DroneDeploy and SkySkopes. In many way,s they are emblematic of the current state of the growing commercial drone industry and provide insight into its future.

PrecisionHawk

Founded in 2010 and headquartered in Raleigh, N.C., PrecisionHawk was one of the first vendors to offer a full end-to-end enterprise drone solution stack. That stack included a drone aircraft with advanced sensors, software, analytics, and contracted services for inspecting things like oil well pads and utility lines and more. (“Advanced sensors” refers to specialized cameras on the drone that detect things like crop growth patterns.) With over $107 million in investment and more than 180 employees, PrecisionHawk has some large customers, including ExxonMobil, John Deere, Monsanto, and Verizon. They offer services in more than 150 countries and have a network of 15,000 pilots.

Two things illustrate how PrecisionHawk leads the industry. First is their regulatory experience and FAA partnership. Second is their focus on operating drones beyond the pilot’s ability to see them, or “beyond visual line of sight” (BVLOS). PrecisionHawk was one of a few companies to partner with the FAA on its Pathfinder Program, and the company’s work is informing current FAA regulations and BVLOS policy. PrecisionHawk also understands that as the commercial drone industry evolves, widespread BVLOS drone inspection has the potential to significantly change business models for many industries. With their programs and papers like “The Economics of Using Drones for BVLOS Inspections,” they educate businesses and help them evaluate when it’s best to use traditional ground and manned aviation, line-of-sight drones, or BVLOS drone inspection approaches. PrecisionHawk is unique in evaluating the costs and benefits of BVLOS operations compared with traditional operations, which allows businesses to plan an aerial intelligence strategy that delivers the most value for the money.

DroneDeploy

San Francisco-based DroneDeploy provides software that controls drone flight plans and workflows as well as processes the images they collect. They have more than 4,000 global customers mapping and assessing everything from construction progress, to disaster recovery, to agricultural crop vigor.  Founded in 2013, the company partnered with leading drone manufacturers to provide its software to operators in a variety of industries, including agriculture, real estate, mining, construction and many other commercial and consumer arenas. Having raised $56M in funding, DroneDeploy started by selling software directly to pilots and later added selling through the channel that supplies mid-size companies and then added direct sales to enterprises and resellers.

By every measure, DroneDeploy has the most popular non-OEM mapping flight application on the market. They boast that their software processes over 100 million images per year and measures more than 10 million distances a year (for instance, between objects). But they are not resting on their laurels. Drone use by surveyors and mappers is rapidly becoming more sophisticated, and as that’s happened, DroneDeploy has been pushing boundaries more than any vendor. Their app market is the largest set of industry-specific integrated applications available.

Part of what has made DroneDeploy (and the drone industry itself) so successful has been the consumerization of drone technology. What others missed but DroneDeploy didn’t was the foresight to see that the prosumer drone category would be the only place where sales volumes and margins would be strong enough for aircraft manufacturers to recoup R&D investment. That’s why, early on, they pivoted from open source-based aircraft to DJI drones since DJI is and has been for four years the dominant player in the space. Last year, DJI’s market share for drone aircraft was 74%. As a result, all the major mission planning and mapping applications like DroneDeploy and dozens more now integrate with or run on DJI’s products. Most of them started off with applications dedicated to their own drone, but soon found that most professionals want to use the simpler and more reliable DJI prosumer drones. DroneDeploy made that bet early, and it has paid off.

SkySkopes

Whereas PrecisionHawk offers a full drone stack and DroneDeploy offers software, this last company doesn’t manufacture anything. They provide drone services. And in a field of more than 30,000 service companies, very few stand out as full-time ventures—let alone as profitable and growing—but SkySkopes does. They succeeded because they specialized. Based in Grand Forks, N.D., SkySkopes started in 2014 and has grown from a small startup with four part-time employees to over 18 full-time employees and four offices across the upper Midwest. Over the years, SkySkopes has refined its focus to strictly providing aerial services for the energy industry and now has operations in California, Texas, Minnesota, Florida, and Europe.

What makes SkySkopes successful is they are not afraid to push the limits of drone technology. Their specialization in acquiring aerial data with advanced aircraft has landed them projects with CenterPoint Energy, Duke Energy, Xcel Energy and a host of others. SkySkopes and NASA have also teamed up over the past few years to demonstrate and test BVLOS use cases for the UTM project to integrate civilian low-altitude airspace and unmanned aircraft system operation. All this landed CEO Matt Dunlevy a seat on the advisory board of the Energy Drone & Robotics Coalition, the only event exclusively focused on the business and technology of aerial, ground/surface and subsea robotics in energy operations.

Together these three companies encapsulate the present state of the growing industrial use of drones. Clearly, that’s not what the media prefers to focus on since it’s not sexy drone pizza delivery. But it’s important work with great business benefits to specific industries.

This article first appeared on FORBES.com

Image credit: Photographer: Patrick T. Fallon/Bloomberg, © 2019 BLOOMBERG FINANCE LP

Seven Trends That Will Shape the Commercial Drone Industry in 2019

[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

Four Commercial Drone Trends to Watch in 2018

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 predictive maintenance and service solutions, as well as 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

Who Benefits from Airmap and its Digital Certificates for Drones?

Airmap, with its low-altitude airspace management platform for drones, continues to garner international market share and new investment, but some uses for its digital certificates raise questions about their role in future airspace regulation.

 

THE FACTS:

AirMap provides low-altitude navigational data and communication tools to the drone industry. In February 2017, they announced $26 million in Series B funding from Microsoft, Airbus, Qualcomm, Yuneec, and Sony, with Microsoft leading the round. At the same time, they announced a partnership to deliver their airspace services for SenseFly drones directly integrated with senseFly’s eMotion flight and data management software. This comes on the heels of many other partnerships and integration efforts with the likes of 3D Robotics, DJI, Hover, Intel, Kittyhawk, Lufthansa Systems, and The Weather Company.

 

WHAT’S COOL AND WHAT’S NOT:

The Airmap smartphone app—available in the App Store and Google Play—is a very useful tool for drone operators. I first became acquainted with it when Hover began using it as the map for their app. I use it to determine (among other things) if the location where I want to fly has any flight restrictions. Flight restrictions include controlled airspace (Class B, C, D, and E), airports, heliports, and caution areas (like Temporary Flight Restrictions, wildfires, prohibited and restricted airspace, national parks, and marine protected areas). All of this of course just augments the geofencing systems that are already built into many drones (like the DJI GEO), which can lock you out of flying in restricted areas.

Another unique feature is Airmap’s Digital Notice and Awareness System (D-NAS), which allows users to communicate flight intentions to the more than 125 airports worldwide that accept digital flight notices. With D-NAS airports can view past and current drone flights, and communicate with drone operators.

At any rate—kudos to the managers and development team for their attention to detail and expanding capabilities. I suspect we’ll see more partnerships and integrations as a result of the AirMap Platform announced in August 2016. This developer platform offers Airmap airspace information and services capabilities for anyone who wants to integrate it with their own software for drones, mobile apps, or web applications.

But here’s the thing

What I think has gotten lost in all the euphoria of recent announcements is the significance of Airmap’s announcement in December 2016 of Drone ID.  Basically Drone ID is a digital certificate for your drone.  Digital certificates are important tools used to secure the internet and other digital communications. The certificate establishes a pair of digital “keys” that are used to encrypt information shared between websites or devices and users. If you are an online shopper you are no doubt aware of browser security that ensures no one can “snoop” in on your transactions. The ‘S’ at the end of HTTPS stands for ‘Secure’. It means all communications between your browser and the website are encrypted. For this to work, an organization needs to install the SSL Certificate onto its web server to initiate a secure session with browsers.  In Airmap’s case, the certificate is issued by them and DigiCert to enable secure connections with drones.

Airmap says the way it works is:

“Drone operators that register their drone online will receive a digital Drone ID certificate, including a unique, validated aircraft identity number that can be loaded onto the drone and shared with others in the drone ecosystem. That identity can be used to digitally sign information coming from the drone, enabling more efficient and secure communication from drone to drone, between drones and other aircraft, and with platforms providing airspace information and services, like AirMap.”

Hmmm.  That’s not like a browser, a device, or a user. That’s other things and other people too.

Drone ID isn’t public just yet.  It’s scheduled to be released in Q1 2017 for drones built with the Intel® Aero Platform for Developers.  At that time, it will also be immediately available to other manufacturers and developers interested in the free service.

So why do you need this and who benefits?

Airmap says Drone ID is designed to “facilitate instant verification of an unmanned aircraft’s identity via a digital certificate, enabling authentication and encryption for drones.” Possible use cases include:

  • Enabling encrypted video to be sent from a drone to a pair of first-person view (FPV) goggles
  • Authenticating commands to each drone in an automated swarm
  • Ensuring that ground communication is “talking” to the right device
  • “Signing” information sent by a drone, such as data from an ADS-B transponder, to verify that it comes from the right drone and isn’t being spoofed

Airmap’s concept of using digital certificates for regulatory purposes first caught my attention when they released the white paper Robust and Scalable UAS Registration – Key Technology Issue and Recommendations in February 2016. Here are the opening paragraphs:

“The growing Unmanned Aircraft Systems (UAS) ecosystem requires accountability of operators, availability of airspace, and security of communications, particularly a confidential, authenticated, and accessible registration system. The FAA’s recent launch of a web-based registration service starts the UAS registration system in an excellent direction. Nevertheless, the scope and scale of the system’s future capabilities remains a concern. The anticipated growth and diversity of UAS use suggests the need for a globally-integrated system more capable than today’s.

A robust and scalable registration system considers the right technologies for its organization, registration information, queries, and security as the UAS ecosystem expands. This paper argues that careful selection of current Internet technologies and protocols can help enable the creation of a registration system that serves present needs but will also evolve as technology advances.”

But their service didn’t get included in the FAA’s small UAS registration, so now what?

Airmap has progressively worked together on an ongoing basis with regulators and other private companies on the various Unmanned Traffic Management (UTM) projects. UTM refers to efforts to build an air traffic management infrastructure for drones worldwide, such as the NASA-FAA UTM project. That project is a collaboration between regulators and private industry partners like AirMap.  You can read Airmap’s statement on UTM here.

One of Airmap’s ideas is to have their D-NAS system at the center with drone operators submitting digital flight plans to airports to receive authorization to fly. The other idea is to have their digital certificates be “the thing” that identifies the aircraft and its owner.

Pregnant pause

Right now all aircraft identification is achieved by physical means commonly referred to affixing an “N” number to the aircraft.  It’s like the license plate on your car.  It’s a semi-private number and it’s tied to your car’s registration. But cars and aircraft don’t have digital certificates.

Don’t get me wrong. I think using digital certificates for data security is generally a good idea. The data collected on the drone should be secured for lots of legal reasons—chain of custody being the most important. But that’s the data—not the drone aircraft itself—and that has nothing to with registration or remote identification of the aircraft for regulators or within an air traffic control system.

There are other solutions for aircraft identification that don’t involve certificates or a digitally enabled UTM system. For example, Vigilant Aerospace completed beyond line-of-sight flight testing of its new FlightHorizon collision avoidance system for drones at NASA Armstrong Flight Research Center in the Mojave Desert without a complex system. You can read about that here.

Airmap is not alone in their quest to be at the center of UTM. That’s because everyone assumes—and no one questions—that UTM is needed right now because “we’re heading fast towards a future in which tens of millions of drones fly billions of flights.”  Airmap says it this way:

“Whatever future you can imagine for drones – from package delivery to flying cars – we are confident that the drone industry has the potential to surpass even the most bullish predictions.”

Sorry.  We don’t see it that way.

I’ve written a detailed piece on why the drone network of tomorrow is farther away than you think. I make the case why airspace integration and management solutions for drones continue to garner new investment, but most options are based on fairytale scenarios and raise more questions than answers. I won’t repeat what it says but the bottom line is the vision of tens of millions of drones flying in the NAS alongside manned aircraft is vastly overstated. Our research shows that the vast majority of operations over next decade will be done largely single purpose drones in visual line of sight (VLOS), not beyond visual line of sight (BVLOS).

THE COMPETITION

There are several Airmap competitors.  Whereas Airmap clearly dominates the “Sky Atlas” space in the U.S., there are other companies that do the same thing. B4UFLY is the “sanctioned” FAA smartphone app. Altitude Angel is the choice in the U.K., and DRONE COMPLIER the choice in Australia.

Even with Airmap’s competition, many operators find a sectional chart to be more reliable, and this is why competent Part 107 operators won’t use these apps. Several drone lawyers tell us they get calls from their clients asking, “Can I fly here? Because Airmap says I can’t.”  Over time, operators are finding that Airmap and B4UFLY say you can’t fly in a lot of places when in fact you can legally fly there. Perhaps the apps are overly restrictive to cover themselves legally.

One thing is for sure. What the FAA showcases in this video is a system of record based on an Esri ArcGIS platform. That platform provides the FAA and air traffic controllers everything from navigational charts to ensuring drones and planes can safely share the national airspace. The presenters indicate the drone data is provided by FAA’s Pathfinder Program partners. There’s no mention of Airmap.

In the digital certificate arena, Airmap seems to have no competitors. But I suspect when one of the Department of Defense (DoD) contractors like Lockheed Martin or Harris wakes up, they’ll just pull the right government levers to secure the business. You can see what Harris is doing already with BVLOS testing here.  We’ll see.

BOTTOM LINE:

Airmap thinks Drone ID with its extra authentication layer will bring security to drones—and for data, we think that’s a good idea, but not if it’s to secure a live link. There’s a valuable lesson to be learned from the management of Air Force drones. Major General James Poss writes about his experiences in It’s the Data Link, Stupid. He says:

“Generally, the less encryption a link uses, the more reliable it is.  Encryption requires lengthy “handshakes” for link nodes to establish identity, then it uses encryption keys to establish a secure link. Too many things can get bungled with an encrypted link. The nodes can fail their handshakes, making it impossible to establish a link. The complicated keys must be the precisely the same on both sides and some human (probably named Murphy) inevitably keys the wrong key at some point.”

General Poss goes on to point we have not figured out how command and control can be performed reliably over the cellular network.

But let’s assume for a minute the “tens of millions of drones” volumes are true. If so, then it’s understandable that any company would want to be in the middle of an internet enabled UTM with a controlling piece—like aircraft registration via digital certificates. Surely at some point in the future it would produce a steady revenue stream. In the Internet world, there are various classes of digital certificates and they range in cost between $18 and $120. Most have to be renewed after two years. The simple math says if those hyped drone volumes come true and if regulators require certificates, then the digital certificate provider could stand to make a lot of money—perhaps hundreds of millions of dollars in the first year of implementation. So, ask yourself, who is benefiting from Airmap’s digital certificates? You as a drone operator, governments, or Airmap?

As always, I’m always interested to hear your thoughts and insights about this topic.  Please comment below.

Image credit: Airmap

Can AeroVironment Compete in the Commercial Drone Market?

AeroVironment’s new drone and cloud-based analytics platform squarely targets the commercial sector, but are they targeting the wrong vertical, too late in the game?

THE FACTS:

Earlier this month, the military and tactical unmanned aircraft systems manufacturer AeroVironment (NASDAQ:AVAV) proudly unveiled its new QuantixTM drone and a cloud-based analytics platform called the AeroVironment Decision Support System (AV DSS™).  The combo is designed with the civil/commercial markets in mind. The drone is a hybrid design that enables the aircraft to launch vertically like a quadcopter and then transition itself for horizontal flight, taking advantage of a fixed-wing drone’s aerodynamic efficiency and range.  According to the company, the drone can map 400 acres in about 45 minutes, and its overall flight time is supposed to be an hour per battery.

The Quantix is a key piece to a larger end-to-end solution AeroVironment hopes will meet the needs of the agriculture, energy, and transportation industries, among others. Key to AeroVironment’s solution is a proprietary mobile interface that works with their secure cloud-based data storage.

WHAT’S COOL AND WHAT’S NOT

It’s great to finally see AeroVironment come out with an offering dedicated the commercial drones market.  While their Puma AE was used for aerial surveys in Alaska—and was the first time the FAA has authorized a commercial UAS operation over land, this product will be the first non-military product in their lineup. So, welcome. Or should I say—I’ll welcome you when you get here. Quantix won’t be available until Spring of 2017. And the price has yet to be announced.  However, in my conversations with the company at last month’s Drone World Expo, it’s clear some among their ranks understand it will need to be priced below $20K, or it’s simply not going to sell well.

It’s interesting that AeroVironment chose to target agricultural needs with its first commercial drone. At first glance, the drone looks well equipped for that, with RBG and multispectral cameras.  But, boy howdy, are they in for some heartburn when they discover they’ve targeted the most difficult sector to penetrate. We have written again and again about the challenges drone service providers have in providing clear ROI in agriculture (and how bad the forecasts are), but I guess that won’t stop manufactures like AeroVironment from thinking they will somehow buck the trend.

The other problem I see is that their new drone is a tail sitter. Tail-sitter drones are notoriously difficult to land in any wind.  I am not alone in this assessment; see another review here. We’ll see if their system is clever enough to compensate for wind gusts, but one thing is clear: there is nothing on the drone to assure a precision landing – no vision positioning system or sense-and-avoid technology in the tail other than a two antenna GPS system. That is so “2013,” and it puts their drone in the same category as a GoPro Karma, which drifts and lands “loud and drunk.

THE COMPETITION:

Most of the companies that serve the precision agriculture market are small businesses. It was clear back in 2014 these companies were working hard to learn firsthand what farmers want from small drones. In doing so, they established networks of distributors and service providers that for the most part have locked other players out of the market.

Manufacturers of small drones for precision agriculture have long since consolidated around DJI and SenseFly because of their (or a third party’s) flight control, mission planning, data services software, and mainly their functional maturity and low cost.

The large aerospace companies and Department of Defense (DoD) contract vendors like AeroVironment do not have a presence in this sector. Even though some have participated in agricultural academic studies, those companies’ products as a whole are unknown in the farming community. They simply have not established the necessary relationships with growers, dealers, coops, agronomists, and local service providers.  As a result, it’s probably too late for them to capture any significant U.S. agriculture market share.

BOTTOM LINE:

In my opinion, AeroVironment’s entry into the commercial markets is risky. For one, they are arriving late to the party. Second, the agriculture sector in particular—at least in the U.S.—is already set. I think Aerovironment is going to struggle to move customers from established vendors.

I worry that all this will take some time for them to realize. In the meantime, there is pressure for them to perform. For years, investors have hoped that the company would benefit from the rising interest in unmanned aerial vehicles. Indeed, the recent positive performance of their stock appears to have come in part from the rise in interest in drones due to a more favorable regulatory environment in the U.S.  But it remains to be seen whether this new offering will make a difference.  We’ll see.  In the meantime, join me in welcoming them to the party.

Image credit: Skylogic Research

This post first appeared on DRONELIFE.com

Sense and Avoid for Drones is No Easy Feat

But development is vibrant, and you’ll see it work first in prosumer drones

THE FACTS:

“Sense and avoid” for drones is a popular topic in the press right now, but the phrase can mean different things in different contexts and for different people. To clarify, there is a difference between solving the problem of “sense” and solving the problem of “avoid.”  Also, there is a difference between “airborne collision avoidance” (which is what most concerns the FAA) and “obstacle avoidance” (which is the problem that most manufacturers are trying to solve right now). With that in mind, this post looks at what a few manufacturers and software providers are doing to solve obstacle avoidance.

WHAT’S COOL AND WHAT’S NOT:

DJI – DJI was one of the first to release a drone that could sense and avoid obstacles. In June 2015, they announced Guidance, a combination of ultrasonic sensors and stereo cameras that allow the drone to detect objects up to 65 feet (20 meters) away and stay away from objects at a preconfigured distance. The kit was immediately available for the Matrice 100 drone development platform.  They subsequently incorporated that technology into their flagship Phantom 4 prosumer drone but not their new professional drone, the Matrice 600.

The Phantom 4 has front obstacle sensors combined with advanced computer vision and processing that allow it to react to and avoid obstacles in its path. The secret sauce for the Phantom 4’s ability to sense and avoid obstacles in real time and hover in a fixed position without a GPS signal is a set of specialized software algorithms for spatial computing and 3D depth sensing. These algorithms are coupled with an onboard Movidius vision processing unit (VPU) that gives the Phantom 4 drone the ability to sense and avoid obstacles in real time. In the “TapFly Mode” of the flight control program, the Phantom 4 obstacle sensing systems are supposed to enable you to fly a path with the drone automatically moving around objects as it flies. But you can find several real-world tests like this one that show it’s not a perfect system.

Intel – Intel is all over sense and avoid, and they accomplish it with active sensors. In 2015 at the Consumer Electronics Show (CES), they gave this sneak peek at what they were working on. In January 2016, they acquired German drone manufacturer Ascending Technologies (AscTec) and dazzled CES with an on-stage demo of their Intel® RealSense™ technology integrated into an AscTec drone that showcased how it can avoid obstacles and continue to follow the subject. They recently announced their Aero Ready-to-Fly Drone, a fully functional quadcopter powered by the Intel® Aero Compute Board, equipped with Intel® RealSense™ depth and vision capabilities and running an open-source Linux operating system. It is geared for developers, researchers, and UAV enthusiasts.

It’s clear Intel understands the importance of sense and avoid technology for ready-to-fly prosumer and commercial drones, too. In June 2016, Intel announced the addition of a factory-installed Intel RealSense R200 camera and an Intel Atom processor module for Yuneec’s Typhoon H.  The module will map the Typhoon H’s surroundings in 3D, which it then uses to autonomously navigate its environment—including rerouting itself around obstacles. Yuneec’s Typhoon H camera drone already had the ability to stop itself before colliding into large objects. But now it should avoid obstacles and keep moving right around them. We’ll see if that comes true in the real world. Let’s hope it does. Otherwise Intel’s $60 million investment in Yuneec may show signs of not delivering the expected return.

Either way, Intel has hedged its bets. In July 2016, a team from Intel and Airbus demonstrated an aircraft visual inspection with a modified AscTec Falcon 8 with RealSense cameras. The demo took place during this week’s Farnborough International Airshow in England on an Airbus passenger airliner.  Additionally, in September 2016, Intel acquired DJI’s VPU vendor Movidius, which means they may have the market cornered for sense-and-avoid technology.

ParrotParrot’s S.L.A.M.dunk integrates advanced software applications based on the robotic mapping construct called “simultaneous localization and mapping,” or SLAM.  The name of Parrot’s solution is a play on the words “slam dunk,” but really it’s anything but that.  SLAM is a computational problem of constructing or updating a map of an unknown environment while simultaneously keeping track of an agent’s location within it. Parrot’s use of SLAM enables a drone to understand and map its surroundings in 3D and to localize itself in environments with multiple barriers and where GPS signals are not available. In other words, it performs obstacle avoidance. Their solution depends on active sensors. You can read more here.

NeuralaNeurala is a software solution that analyzes the images from off-the-shelf cameras to enhance drone navigation. Unlike Parrot’s solution, Nueurla technology is passive. It uses GPU-based hardware running artificial intelligence neural network software. While commercial-grade GPS can fly a drone close to its objectives, Neurala software can help it identify safe areas to travel and land. At InterDrone, Neurala announced the launch of Bots Software Development Kit. The kit will allow manufacturers to install artificial-intelligence “neural” software directly into their applications without the need for additional hardware. That said, full collision avoidance is still under development.

LeddarTech – Leddar just announced its modular Vu8. The specs make it ideal for autonomous drone use. The Vu8 is a compact solid-state LiDAR sensor that detects targets at a range of up to 705 feet (or 215 meters) and weighs 75 grams. The Vu8 is an active sensor that “could be” used for collision avoidance, navigation, and as an altimeter for drones. According to LeddarTech, the Vu8 LiDAR is “immune to ambient light” and was designed to provide “highly accurate multi-target detection over eight independent segments.” There are some cool details in this video but no real-life use on a drone demo just yet.

BOTTOM LINE:

At this time, the drone industry appears to be rich with R&D and solutions that attempt to tackle the obstacle avoidance problem. But a simple search on YouTube for successful real-world examples reveals we still have a way to go before anyone claims victory. I like what LeddarTech says:

Available drones sensing solutions for position and range measurements as well as for collision avoidance are still far from perfect: GPSs and barometers aren’t full-proof—even outdoors—and can’t be relied upon when navigating indoors. Ultrasonic altimeters have very limited range. Optical flow sensors require good lighting and textured surfaces, and camera vision are still a work in progress and tend to be processing-intensive.

As with any technology, there are always trade-offs. It’s still not clear to me who has the category-killing solution. I think that’s going to take more R&D investment. One thing is for sure—we’ll see more new sense-and-avoid product and tech announcements this year. Like with DJI, I believe it will continue to be released first in prosumer drones because that’s the only place where sales volumes and margins are strong enough to recoup the investment.

Image credit: Intel

This post first appeared on DRONELIFE.com

Can PrecisionHawk Tame Drone Traffic in the Sky?

PrecisionHawk’s LATAS delivers an innovative air traffic control system for drones, but it’s one of several that depends on the not-so-imminent success of all aircraft using ADS-B.

THE FACTS:

This past week (August 29, 2016), the FAA granted PrecisionHawk a waiver from Part 107.31’s visual line of sight (VLOS) limitations, which gives them the ability to continue their research and to train those who want to offer these extended visual line of sight (EVLOS) flights as a service. The waiver was granted based on over a year’s worth of testing under the FAA Pathfinder program. Under Pathfinder Phase 1 research, PrecisionHawk determined that the extension in range offered by EVLOS operations supports a significant expansion in the area that each drone flight, possibly up to 12 times what is achievable within line of sight.

To do this, PrecisionHawk uses their airspace display technology called LATAS, which stands for Low-Altitude Tracking and Avoidance System. LATAS is an onboard system that connects airspace management technologies, such as sense and avoid, geo-fencing, and aircraft tracking, into a service package for commercial and recreational drone operators as well as regulators and air traffic controllers. Developed to be plug and play or integrated into a drone’s circuit during manufacturing, LATAS is small (3-in by 2-in by 1-in), light (Less than 100 grams) and operational on network speeds as low as 2G. While it is not required to receive an EVLOS waiver, LATAS plays a key role in PrecisionHawk’s own operations. The LATAS web application is a free tool available on www.flylatas.com  and is intended to provide an extra layer of safety and protection operators flying under Part 107.

WHAT’S COOL AND WHAT’S NOT:

As I’ve have noted in Market Impact of the FAA Small Drone Rule, the inability to fly EVLOS restricts some high-margin operations. This new ability allows a drone to improve its economic efficiency and cover acreage which is needed for a large percentage of agriculture fields, mining operations, and large infrastructure sites.

One problem we see with this type of system is it may not be reliable in remote areas.  Even though cell network companies are working to extend their networks by partnering with rural carriers, everyone who uses cell phones knows about gaps in service that happen unexpectedly. These gaps could have much more serious consequences than a dropped call if they happen to a small drone.

Additionally, we see integration with the Harris ADS-B (Automatic Dependent Surveillance – Broadcast) network data as a good thing, but, as we have written about in our in-depth research study ADS-B and Its Use for Small Drone Traffic Management, the FAA’s NextGen mandate for ADS-B has inherent limitations. For one, use of ADS-B “Out” (the signal that says “here I am”) is not required in Class G airspace where most small drones fly, and two, the FAA did not mandate ADS-B “In” (the ability to see other traffic). These together are killers for its effectiveness. Aircraft (including drones) can push all the “Out” signals they want, but if other aircraft can’t receive or “see” them, then they don’t know where your aircraft is and no avionics system can overcome that.

THE COMPETITION:

PrecisionHawk is not alone in their endeavor, and we’re beginning to see others create ADS-B based solutions for drones.

For example in July 2016, DJI and uAvionix announced the release of an ADS-B collision avoidance developer kit. The uAvionix “Ping” sensors are among the smallest and lightest ADS-B-based hardware available for unmanned aircraft. Their Ping ADS-B receiver allows a drone to “see” surrounding aircraft and initiate collision avoidance maneuvers based on that information.

Sagetech has created a family of transponders ideal for the size, weight, and power requirements of unmanned systems applications. Their XP transponder data can be output via RS-232 serial communications to a wide range of compatible flight computers.

Other drone traffic management paradigms have been proposed – for example Google’s SkyBender and Amazon’s “Good, Better, Best”.  I could go on, but you get the point. The pot is beginning to boil.

BOTTOM LINE:

The current FAA plan emphasizes using small UAS in areas outside airport locations which should be geo-fenced to avoid drones interfering with large vehicle landing and take-off activities. But for all these drone traffic management plans, ADS-B technology (or ADS-B-like signal integration) is a key element for tracking and reporting a drone’s position.

NASA knows that someday unmanned vehicles will share airspace at low altitudes with general aviation equipment such as airplanes, helicopters, and gliders. That is why it created the Unmanned Aircraft System (UAS) Traffic Management (UTM) initiative.  Agreeing on a safe and efficient system that will manage both manned and unmanned traffic is a vital concern for the FAA, NASA, private companies, and academic users.

But given the inherent limitations of ADS-B, will any of these systems work as intended?

Image credit: PrecisionHawk

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

Commercial Drone Markets: 2015 Year in Review

What a difference a year makes.

Last year at this time, I reflected back on the news and trends of the commercial drone markets of 2014 and wrote about the mixed state of affairs in the U.S.  Back then, drones got considerable media hype and you would have thought that drones could do anything from guide your car in the wilderness, to save the planet from starvation.  In reality, we were just beginning to see the very first FAA grants of regulatory exemptions for commercial activity—which was nothing more than filming on closed sets.

Contrast that with this year, one in which we’ve seen more than 2,500 Section 333 grants for all kinds of commercial activity and the press’s narrative that ‘drones are cool’ turned to ‘drones are a headache’. Even so, there’s more going on than just public consternation.

In this post, I’ll review what I think were the six most significant commercial market trends for drones in 2015 set in the context of movies and myths.  Enjoy.

  1. Casino Royale: Venture Capital

In the 2006 movie Casino Royale, James Bond attempts to bankrupt a terrorist financier by beating him in a high-stakes poker game. The plot twists and the tournament culminates in a $115-million winning hand for Bond—who discovers later the woman he fell in love with has stolen the winnings.

Just how high is the game of drone investment?  According to CB Insights data, we’ve seen $199 million in 30 deals year-to-date. That’s more money invested in commercial drone businesses in the first nine months of this year alone than all previous years before.

These investments have been funded mostly by venture capital firms like Accel Partners, Andreessen Horowitz, and Kleiner Perkins Caufield & Byers. But other firms—like GE Ventures, Qualcomm, and Intel—are also investing to cash in on what they see are growth markets for their chips or IoT offerings.

The gold rush may be over. As pointed out here, there’s a growing sentiment that we’ve reached a precipice. Private valuation euphoria seems to be dissipating. Tech IPOs are down (and the tech startups that have gone public are generally under-performing). Volatility in broader markets is creating uncertainty.

Will these firms get stiffed like James Bond?  Some will. Just look at the offices some occupy in San Francisco (big rents!) and the high cost of high-caliber employees.  Not to mention the assumed crazy forecasts included in these firms’ business models (like the ones I’ve referenced in Diversity and Hype in Commercial Drone Market Forecasts). In 2016, we may not see a “crash and burn,” but keep your eye out for a quiet “right sizing.”

  1. Magic Carpet: Drone Air Traffic Management

In nearly all the legends and folklore, the magic carpet is used to portray the power of the carpet’s master. One legend has it that the Queen of Sheba gifted King Solomon a green and gold flying carpet studded with precious jewels. It is said that this flying carpet held spectacular powers. Made from a special type of clay with magnetic properties (and since the earth is a magnet), it held the ability to hover several hundreds of feet above the ground. With the carpet, Solomon was able to travel vast distances, but not without some big mishaps.  In legend, the carpet seems to be a metaphor for his power and reach.

A lot of companies like Amazon, BNSF, BP Google, and even Walmart, want a magic carpet, too.  They want a low-altitude air traffic management framework for drones so they can deliver goods and perform operations beyond visual light of sight (BVLOS)—and that’s exactly what NASA has promised in the Unmanned Aircraft System (UAS) Traffic Management (UTM) project. NASA’s UTM piggybacks on the FAA’s Next Generation Air Transportation System (NextGen).

The present FAA plan emphasizes use of small UAS in areas outside airport locations, which would be ‘geo-fenced’ to avoid drones interfering with large vehicle landing and take-off activities. But for all these future UTM plans, ADS-B technology (or ADS-B-like signal integration) is a key element for ‘tracking’ and reporting the position of a drone.

The problem is ADS-B use as mandated by the FAA is fraught with shortcomings.  For one, ADS-B is not mandated for use in Class G where most small drones will fly. On top of that, ADS-B “In” (the part that tells you where other aircraft are) isn’t mandated for anyone. Additionally, some pilots already feel the new activity of ADS-B distracts too much, and small aviation flyers may choose to ignore new input or not update their systems.

So, here we are working on a magic carpet solution to low-altitude flight management, and the mistake may be that we are trying to solve it with an improperly regulated flight management solution. We’ve detailed these and ten other issues in the study ADS-B and Its Use for Small Drone Traffic Management which you can read more about here. We also discussed the NASA UTM on the sUAS News Podcast: Drone Hype Cycle.

  1. Enter the Dragon: DJI

When it first looked like there could be commercial uses for drones, analysts assumed that defense avionics and electronics suppliers would lead the market because they had a head start. Then came DJI.

Often considered one of the greatest martial arts films of all time, Enter the Dragon (starring Bruce Lee) was the first Chinese martial arts film to have been produced by a major Hollywood studio, Warner Bros. The 1973 film is largely set in Hong Kong.  I think the name is a fitting description for DJI, which is headquartered in Shenzhen, China, just outside Hong Kong.  According to The Economist, the company is at the forefront of the civilian-drone industry.

DJI estimates itself to have 70 percent of the commercial market worldwide and a larger portion of the consumer market, but it really more like 50 percent.  This 50 percent number plays out when looking at FAA data.  As we reported in sUAS News, DJI is the first drone company to break the magical 1000 N registered airframes, and they still hold a commanding lead with a reported 44% market share as of December 8, 2015.

DJI continues to release new product after new product and leads other manufacturers with technology like geo-fencing and even micro investments with its SkyFund.  I predict this will continue well into the future given their current lead, their strategic partnership investment with Hasselblad, and their recent investment into an R&D facility in Palo Alto, California.

  1. Our Gang: Consumer Drone Registration

Our Gang (also known as The Little Rascals) is a series of American comedy short films about a group of poor neighborhood kids and their misadventures of saving others and sticking together. Their motto was: One for all, and all for one. And while that’s not the motto you would normally hear from such a diverse group as those on the UAS Registration Task Force Aviation Rulemaking Committee, it is the outcome.  And what an outcome it is. You can read their recommendations here. Some mainstream publications like this one are describing the consumer registration process as “becoming a pilot” or “getting a pilot’s license.” Which you’d have to do when you purchase a $200 hobbyist drone. Really?

Just as we see in the Our Gang films, the outcome is not always optimal and the methods used to get there questionable. Jonathan Rupprecht has a good analysis on the outcome here. Another analysis here calls it “ineffective and unenforceable.” To be fair there were dissenters in the group. For example, the Academy of Model Aeronautics (AMA), which is the world’s largest community-based organization, made this statement on the recommendations.

Nothing has been put in place yet, but one thing is becoming clearer: the FAA’s method to put hobby drone registration in place is specious. A thorough legal analysis by Morrison and Forrester here spells out the FAA’s procedural shortcuts and how the registry would present legal challenges and confusion for commercial drone registration.

  1. Best in Show: Drone Expos

2015 was the year we saw a proliferation of the drone conferences. These ranged from consumer to commercial expos.  I heard early from vendors who straddle both markets that they could not attend all, so they had to choose. In March I gave a quick list of criteria to help navigate the confusion in Five Tips for Navigating the Drone Expo Fad.

I reported then and Gary Mortimer reported here we are still in the ‘inflated expectation phase’ of the hype cycle for drones, so it’s anybody’s guess which conferences will shake out.  Still at every show I attended this year, these two questions came up: Which drone show was the best? And which ones will you attend next year?

The question reminds me of the comedy film Best in Show. The film follows five entrants in a prestigious dog show and focuses on the slightly surreal interactions among the various owners and handlers as they travel to the show. Afterwards, the film explores what each character is doing after the competition—and this is the real drama for drone vendors: What happens after the show?  So the better question is not about how many connections you make at the show, but are shows in general a good channel at which to engage prospects?  I think that topic (as well an exploration of distribution channels) is worthy of some Drone Analyst research in 2016. Look for more on this topic soon.

  1. Waiting for Godot: You

In the absurdist play Waiting for Godot, two bedraggled companions, Vladimir and Estragon, wait endlessly and in vain for the arrival of an unspecified person called Godot. The play opens on an outdoor scene and the weary Estragon mutters “Nothing to be done.”  When Estragon suddenly decides to leave, Vladimir reminds him that they must stay and wait for Godot. Unfortunately, the pair cannot agree on where or when they are expected to meet with this Godot. They only know to wait at a tree, and there is indeed a leafless one nearby.

For many of us, it seems we have been waiting for Godot, I mean the FAA, to finalize the rules for commercial use of small UAS. We got the Small UAS Notice of Proposed Rulemaking (NPRM) earlier this year and the 60-day public comment period closed on April 24, 2015. Sure, as noted above, we now have about 2,500 Section 333 petitions granted, but that does not make an industry.  Everyone wants to know—will Godot arrive in 2016?  The tree we wait under now is pretty much leafless, and we hope the rules will help our industry garner growth.

What should we expect in 2016?

I said this last year, and I’ll say it again.  A lot depends on the forthcoming small drone rule from the FAA.  If it looks at all like the NPRM, then the U.S. commercial market should expect moderate growth—but there will be winners and losers.  If the FAA changes it, for example lowers the altitude ceiling from 500 feet above ground level to 200 feet, then growth will be seriously hampered.

You can find more of our 2015 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.