As I write this piece, news coming in suggests the US FAA has finally allowed a drone startup for commercial package delivery. Flirtey, an Australian startup, will carry medical supplies to remote rural regions in Virginia. The action is likely to boost the morale of more than 29 drone startups that received approx. $100 million funding last year (calculated by CB Insights). But what is also happening simultaneously in this dynamic market is the transformation of these startups from being drone makers to big data service providers. And evidently, that seems to be the right move. But before we talk about it, let us briefly review the evolution of the commercial drone market.
Traditionally considered a defense equipment, an estimate places 12% of the global drones demand to be commercial in the near term. In dollar terms, this would translate to anywhere between $7-10 billion market in the next five years. What is driving this market? Flying at low altitudes, drones capture high precision data compared to satellite imagery and are far more economical and real-time than running surveyor campaigns. Also, frequency of aerial surveys and their scheduling can be far greater controlled with drones. With advent in imagery technology, the ability of drones to capture even higher resolution images and related data types will get even stronger. While many of us have been only following the Amazon Prime Air package delivery plans, drones can be used for a wide array of applications including weather and environmental monitoring, natural resource exploration and, aerial imaging and mapping. Market analysts say that precision-agriculture farming will account for more than 70% of the commercial drones market. Precision-farming is already creating buzz worldwide. I also talked about it in detail in another article recently.
Citing this opportunity, the market is abuzz with new entrants. Only last week, a LA based drone startup, Skyworks Aerial, launched a Kickstarter campaign for developing its drone kit and customization software. What is also allowing new entrants an easy entry into the market is gradual commoditization of the drones system. Heralding this trend is the steep fall in smartphone production costs. GPS, gyroscopes and accelerometer prices have fallen steadily – thanks to smartphone manufacturers. And open-source initiatives such as Drone Code are reducing the entry barrier further. Also, makers are themselves developing the software to manage robot parameters that feed on the readily available Google Earth data. Having said that, makers still have a lot of room to differentiate themselves from the others on the basis of hardware and software. We know LiDAR units have unparalleled data capture capabilities but their mass commercialization is restricted by their heavy weights that most commercial drones cannot carry. Tech advancements in that arena is likely to attract attention (Phoenix Aerial Systems and XactSense are a couple of startups who are doing it). On the software front, software pre-loaded with 3D models for running pre-flight simulations will be of good help. In addition, it is true that the drone technology has far from been perfected and tech advancements will keep on happening.
But that is just half of the story. While ability to gather data is turning easier, what is not easy is analysis of that data. Drone data is seriously big data. Turning imagery into precision 3D models (photogrammetry) requires considerable amount of computing power requiring big data. And drone players are realizing this. The ones who will survive and bloom will not be those who’ll sell drone to customers, but those who’ll sell it as a service. Customers want analyzed data. Also, for many SMBs, buying drones isn’t the most optimized expense strategy. Setting an in-house team to process and evaluate this data is also no easy business. Outsourcing this activity to drone-data-as-a-service makes a lot of business sense. Skycatch and Precision Hawk are few of such startups that are working on this model – leasing their drones for data collection and analysis on behalf of their customers. Advent in cloud-based processing, evaluation and storage technologies and 3D on the web (WebGL) will make execution of this model easier. We may look no further than startups such as Data Mapper (from Precision Hawk) and Propeller Aerobotics that are building solutions that help any enterprise with analysis of aerial imagery data.
Clearly, the future fight in the drone market will be fought on the respective abilities of data cleansing, correction, calibration, processing, evaluation and storage – in essence, on “better data capabilities”. Having said all that, regulatory hurdles will remain the key challenge for this industry. The industry is yet to build navigation infrastructure that is secure and implementable. Who’ll monitor the air traffic? Who’ll pay for the maintenance? Will that increase costs? Only time will tell.