Drone Industry Experiences Giddy Enthusiasm
Last week, I attended the INTERGEO exhibition in Stuttgart, Germany. It’s the largest geospatial conference in the world with more than 17,000 attendees from 92 countries flooding the exhibition halls. It’s quite different from other conferences I attend in that there are very few technical presentations to distract the attendees, so they swarm the exhibition halls like bees to a hive throughout the three-day event.
On the last day, yours truly was interviewed by INTERGEO TV on my thoughts about this year’s event. I had to restrain myself from promoting INTERGEO North America (I made that up). In a day when conferences are generally suffering, I think it would be a smash success to have a similar INTERGEO event in North America. It’s completely vendor-independent, so the attendees can enjoy a taste of a broad range of geospatial technology, no matter what their name is or who they compete against. To view a ~5 minute interview on my thoughts of this year’s INTERGEO conference, click below.
Our trusted videographer, Joelle Harms, was on fire this year and shot more than a dozen videos in various exhibition booths. They’ve been very popular in the past because they give a snapshot of various products and services offered by exhibitors at INTERGEO. The following ~10 minute video provides a solid overview of Day 3 at INTERGEO including comments from Trimble VP Bryn Fosburgh, Topcon Executive VP Eduardo Falcon, Esri Director Chris Cappelli, and Hexagon President/CEO Ola Rollen.
I know I’ll receive some feedback on using the word “Drone” instead of UAS or UAV. I’m sorry, but the word “drone” can be used without explanation. Every reader immediately understands the context. The same can’t be said for the term UAS or UAV. That said, I’m trying… 🙂
Cruising through the INTERGEO exhibition, I experience drone saturation: drones for every conceivable purpose, in every conceivable corner of every exhibition hall. It’s giddy enthusiasm at its best. The reason is that there is very little proprietary technology used in drones, so the barrier to entry to design and manufacture a drone is low. The result is A LOT of competition. Drones of every size and shape filled the halls at INTERGEO. By far, it was the dominant technology on display. But how many buyers are there?
Yes, the industry giant, China-based company DJI at ~70% market share will be the first drone manufacturer to exceed annual revenue of $1B this year, up from $130M in 2013 according to the Wall Street Journal. Not bad for a college dorm room start-up that was founded just nine years ago. They are the Garmin or TomTom of the drone world. I own a DJI drone. It’s the real deal. In second place is 3D Robotics, founded in 2009, and is estimated to finish 2015 at $40M in revenue. A distant second, and nearing a place where there’s a sea of sameness.
The drone industry is a place of sellers looking for buyers, in a ratio rarely seen. For example, at INTERGEO, there were ~17,000 visiting ~550 exhibitors which computes to ~31 attendees for every exhibitor. In two weeks, I’ll be attending and speaking at the Commercial UAV Expo in Las Vegas. There will be in excess of 100 exhibitors while the number of attendees will range somewhere between 500 and 1,000. That could be as few as five attendees for each exhibitor. With that ratio, the cost of customer acquisition is excruciatingly high, perhaps non-sustainable.
The investment banking community is on hyper alert. Venture Capitalists invested $108M in drone companies in 2014 according to CB Insights. That number is expected to double in 2015. The supposition is that the market will explode because; think about it, the U.S. Federal Aviation Administration (FAA) has still not modified its rules to incorporate small drones for commercial use into the U.S. National Airspace System (NAS), which is expected to occur in late 2016. Therefore, the assumption is that the U.S. drone market is constricted by government policy and poised to go nuts when the new regulations are released. That’s true to a point; however “damn the regulation” is the modus operandi (MO) for many drone operators using them for business.
An FAA press release notifying Washington, D.C., visitors to “leave your drone at home” prompted a reader to comment “The FAA can go to hell. I’ll fly my drone where I damn want.” It will be interesting to see how the investment community reacts when (not if) a drone crash with serious consequences occurs.
Giddy enthusiasm? Yes. But I cannot deny the coolness factor and value of the technology. I own a drone, and it’s a lot of fun. Look at what I was able to produce with just 35 minutes of flight time and with a piece of software called PhotoScan from Agisoft (in demo mode):
3D Model from 35 minutes of drone flight.
The same 3D Model from a different perspective.
With only 35 minutes of flight time with a consumer-grade drone and a couple of hours at my computer, it’s not difficult to see myself becoming giddy, no, wildly enthusiastic.
Thanks, and see you next month.
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About the Author: Eric Gakstatter
Eric Gakstatter has been involved in the GPS/GNSS industry for more than 20 years. For 10 years, he held several product management positions in the GPS/GNSS industry, managing the development of several medium- and high-precision GNSS products along with associated data-collection and post-processing software. Since 2000, he's been a power user of GPS/GNSS technology as well as consulted with capital management companies; federal, state and local government agencies; and private companies on the application and/or development of GPS technology. Since 2006, he's been a contributor to GPS World magazine, serving as editor of the monthly Survey Scene newsletter until 2015, and as editor of Geospatial Solutions monthly newsletter for GPS World's sister site Geospatial Solutions, which focuses on GIS and geospatial technologies.
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Erik,
I’m not going to take you to task for using the outdated (and arguably offensive) term “drone”. You are not alone although you may be one of only a few actual UAV owners who don’t find the word disagreeable.
What I do wish to address is your characterization of the industry as rife with irrational exuberance. It’s true that there are far more companies producing UAVs than necessary but I would argue that rather than being an irrational response to this burgeoning technology it’s an entirely reasonable reaction to want to create a product that’s better/cheaper/safer than your competitor down the street. Not only does this benefit the individual consumer, it benefits the industry as a whole. Whatever happened to the concept that competition is a good thing?
What I do find irrational is the government’s exceedingly slow response to “permitting” the use of this technology in light of the acknowledged benefits inherent to it’s integration into the mainstream. There’s no denying there can and will be incidents involving UAS resulting in serious consequences to life and property. The same thing is true of every automobile or manned aircraft (or chainsaw for that matter) ever sold. If that alone is reason to stifle such technology than I fear for the future of this great country of ours. The nanny state mentality is destroying innovation and it’s time to inject a little rationality into government oversight.
Hi James,
Thanks for taking the time to comment. I appreciate it.
My editorial was meant to be more of an observation than a criticism, although I might be critical of the investments that some of the venture capitalists have made. I’m with you 100% on competition being good for the consumer. The value I get from my Phantom 3 amazes me. It’s only possible because DJI has been pushed by their competitors to add features and keep costs down via mass production. Very few drone mfrs can claim to be in mass production mode, but DJI is in that group, and it shows in the quality of their product. It’s not perfect, but the bang-for-my-buck is pretty darned good.
I understand your frustration with the FAA. I’m actually pleased with with their actions over the past few months, but maybe that’s because my expectations were very low to begin with. In my experience, the FAA is ultra-conservative and acts in a very slow and deliberate manner. Many would view that as a good thing as it has kept the US airspace very safe. The downside is that it’s very slow to integrate new technology such as NextGen <https://www.faa.gov/nextgen/> and UAS. Furthermore, I think the FAA was ill-prepared for the explosion of UAS technology in the commercial marketplace, which required them to respond quickly. The terms FAA and “quick response” are an oxymoron.
If you’ve got a FAA pilot license, obtaining approval to fly UAS commercially is fairly painless and relatively quick. My 333 Exemption took about three months and I’ve got a nationwide CoA up to 200 feet AGL. It’s great if you’re flying in rural areas (eg. agriculture, transmission lines, etc.). The challenge I see is the number of no-fly zones in the urban environments. If you use the FAA B4UFLY app, you’ll see the no fly zones are plentiful. When you are in densely populated areas (eg. northeastern US metro areas), it’s almost impossible. It’s difficult to see how a realtor with a 333 Exemption could reasonably use a UAS in a densely populated area. I haven’t attempted to apply for a CoA in one of those areas yet, but I plan to. It will be interesting to see what kind of response I’ll receive.
I’d argue that UAS are in the same category as autos and manned aircraft. The latter two are heavily regulated. The difference is the regulatory infrastructure is already in place. None of that exists for UAS, or UGV for that matter.
Regards,
Eric