Ash has spent close to 20 years in technology research on several sectors, including industrial automation and smart manufacturing, smart home, solar power and energy storage, drones and robotics, medical technology and building automation. Ash is Senior Research Director for our robotics & warehouse automation research, amongst other topics.
The consensus at last week’s AUVSI Xponential show in Dallas was that the footfall and size of the show was probably lower than the year before in New Orleans. This might have been surprising to those not familiar with the industry who have seen the increasing media attention and news surrounding drones. However, for those of us tracking the market closely and who have observed the challenges in the industry and the financial woes of some of the biggest suppliers, this did not come as a surprise at all. What also was very evident at the show was the increasing focus of UAV companies on the commercial sector.
Intel for example, whose CEO, Brian Krzanich gave a keynote speech at the event showcased the company’s commercial UAV products, notably the Falcon 8+, aimed at the inspection market. Meanwhile, consumer UAV leader, DJI showcased its Matrice 200 drone which is capable of carrying two separate payloads and again aimed at inspection applications.
The UAV market broadly segments into three distinct application groups and customer bases. Defense or military was obviously the first adopter of drone technology and remains today the largest sector for UAV manufacturers. It continues to grow at a relatively steady pace. The consumer market has seen massive volume growth in recent years, but is now plagued by oversupply and price erosion. The newest and by far smallest segment is commercial. But whilst the commercial UAV sector today is relatively small, commercial applications undoubtedly have the best potential for providing growth for the wider UAV industry.
From building inspection to gas pipeline surveying, to crop inspection or public safety, the commercial use cases for UAVs are endless and the value proposition and drivers of UAV uptake are huge. Perhaps not surprising is that the commercial sector is one which almost every UAV supplier (and newcomer) is now paying particular focus to – especially those that are heavily dependent on their consumer products. The consumer sector is not likely to see wide-spread usage beyond hobbyists and technophiles, and at the same time likely to come under increasing price pressure as we see more low-cost, Asian vendors target it. As such those vendors, such as DJI that have been historically strong in the consumer/prosumer space are placing increasing attention on commercial products and applications. Similarly, those companies that traditionally focused on the defense sector and now looking to leverage their expertise and product portfolios to capitalize on the anticipated growth the commercial sector presents.
Success in the commercial sector will be by no means straightforward. The sector is nascent and whilst the benefits of using UAVs in countless applications are clear, several barriers remain. Regulation is possibly one of the biggest hurdles to be overcome. In the US for example, the FAA has to provide case-by-case authorization via a Section 333 exemption, or adhere to Part 107, for UAV operators to perform commercial operations in national air space. And whilst the regulatory environment in the US has improved in the last nine months or so (since Part 107 became applicable), the same is not true in other countries around the world. The complex nature of individual countries having different regulations, legislation and restrictions limits the ability for UAV companies to scale in multiple markets and hinders uptake. Perhaps even more crucially is that beyond-visual-line-of-sight (BVLOS) operation is not possible in the US and many other countries without a lengthy certification process. Operating BVLOS is really the holy grail for this industry. It unlocks the potential to use UAVs in a much widespread, scaled and co-ordinate way that massively
boost the value proposition and cost competitiveness of UAVs. Of course, there are many other barriers to overcome, which we will address shortly.
Interact Analysis will be soon publishing a new market study analyzing and forecasting the global commercial UAV market. If you’d like more details please contact us.
To access receive free updates on the commercial UAV industry from Interact Analysis, please just register here.