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What's Amazon Thinking?

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I donít know about you, but Iíve found the reaction to Amazonís trial balloon to use drones to deliver packages quite curious. Itís been generally negative and several people whoíve Iíve talked to in casual conversation brought it up as a kind of †WTF. Are they really serious?

A poll done by HuffPost/YouGov found that 41 percent of those polled aren't sure if deliveries by drone are a good or a bad idea, 36 percent think itís a good idea and 22 percent replied that itís bad idea. (I'm with the not sures.) Most of the skepticism centers on technical issues such as battery endurance, range, speed, FAA regulations for low-altitude autonomous UASs and safety. Even Jeff Bezos said one thing theyíll have to sort out is how to keep the things from bonking people in the head while landing.

But none of the coverage I saw addressed this question: Why would Amazon want to do this? I get the PR value, assuming that if it works, Amazon looks like itís staying on the keen cutting edge, but my instantaneous first reaction was the economics of it. Think of it in the mass transit context.

If you take the bus to work, it costs you a fraction of what it costs to drive. The same economics apply to airline flying, too. You canít fly your personal airplane 1000 miles as cheaply as you can buy an airline ticket to cover the same distance.

UPS trucks are buses for boxes. The incremental cost of throwing more boxes on the truck is trivial, which is why UPS can ship stuff half way across the continent for under $10. But drone economics are the reverse. Thereís no economy of scale because each delivery is a dedicated event and scaling up may require more aircraft. Or more time. Maybe a lot of both. People assume that drones are cheap to operate because theyíre autonomous, require no pilot and the electric-powered ones require no fuel. They do require recharging, so thereís real expense there, but they are more efficient.

As weíve reported before, Diamond is making quite a tidy little business out of selling piloted sensor aircraft to compete in markets where drones could easily do the work. The reason is that drones require significant infrastructure to set up and manage and that requires people and investment. Not to mention delays in clearing airspace. So for the time being, itís still cheaper to used manned aircraft in many instances where UAS might otherwise be deployed.

Bottom line: The UPS truck might bring the package for $7, but the drone will cost $30. Iím making up numbers here, but you get the drift. Also, at least for the foreseeable future, a drone of the size Amazon envisions has short range. Like under 10 miles. So unless you live within that radius of one of Amazonís 60 fulfillment centers, you wonít be seeing a drone on your doorstep, unless it belongs to NSA.

Not that this would necessarily stop a company like Amazon from marching forward. Forget the mass transit economics for a minute and apply Facebook economics. Tech companiesóespecially web tech companiesódonít necessarily operate to the same economic rules as the rest of the business world. If they did, Twitter wouldnít have a $25 billion market value.

So even if it costs four times as much to deliver a package by drone as by truck, you can easily imagine how a company like Amazon might do it anyway, losing bundles on each sale, just for that priceless cachet of leadership. Audacity never comes cheap. And what hell, if I knew my new HD Fire SBX was arriving via drone in the next 30 minutes, I can think of worse things to do than watch it use the Pineapple Palm in the front yard as a stepdown fix.

Join the conversation. †Read others' comments and add your own.

Comments (37)

It also has the feel of an April Fool's joke, done just to drum up some publicity and get people talking about Amazon. The other thing I keep picturing are packages getting soaked in rain/snow (unless they only fly on clear days), or getting blown around and off course in high winds (whatever "high" winds are for such drones).

Posted by: Gary Baluha | December 6, 2013 10:48 AM    Report this comment

It's a publicity stunt. Those are called quadcopters. They will never, ever get approval to run those autonomous.

Posted by: Steve Waechter | December 6, 2013 11:13 AM    Report this comment

How can anyone ignore the safety aspect? Liability? Lawyers? No way this is going to work in the modern legal environment even if the technical details get sorted out.

Paul, you make a good point about "scaling"; a similar thing exists in the telecommunications industry where the holy grail has been to get direct fiber piped to every household. But the cost of that "last mile" (or first mile as the marketers call it) from a neighborhood telecommunications hub to the home itself is exponentially more costly to prevent it from ever becoming practical. As it stands now, on Google has done this for a field trial and they are taking a bath but they can afford it for a couple sites and bask in the publicity. In the same way, a drone to every home is going to balloon the cost to the point of unaffordability.

Posted by: A Richie | December 6, 2013 11:31 AM    Report this comment

Or, people shooting at these things and / or theft, of the drones themselves and the packages...

Posted by: Pete Hamilton | December 6, 2013 12:10 PM    Report this comment

Can you imagine hacking the Amazon drone network? Not only would a large amount of property be at risk, but terrorist implications as well...

Posted by: A Richie | December 6, 2013 1:36 PM    Report this comment

You are using the wrong examples for cost comparisons. The UPS truck may cost only $7 to ship a package but it won't be delivered in under 30 minutes like the drone. The drone isn't intended to replace the UPS standard service via truck+hub. The cost comparison you need to draw is a door-to-door same-day delivery service.

Posted by: Dennis Lou | December 6, 2013 1:44 PM    Report this comment

People shooting at these things??? Terrorist implications??? Hacking the network??? Merry Christmas to you all.

Posted by: Rafael Sierra | December 6, 2013 5:48 PM    Report this comment

Amazon is thinking, "There was no free advertising about me in yesterday's mass media. I can fix that."

Posted by: Sam Strohl | December 7, 2013 4:57 AM    Report this comment

Amazon is thinking what Mr. Strohl said.

Posted by: Jason Baker | December 7, 2013 8:10 AM    Report this comment

I've got a 14 pound cat that will take that sucker right out!

Posted by: hunter kim | December 7, 2013 6:46 PM    Report this comment

I think their target audience is someone who absolutely has to have the new iPhone fastest and will pay an extra $100 to have it within 2 hours. Probably a market there.

Posted by: Josh Johnson | December 8, 2013 7:46 AM    Report this comment

What Dennis Lou said. You don't have to pay a wage and benefits to a drone. Or workman's comp.

Posted by: Matthew Lee | December 8, 2013 12:35 PM    Report this comment

Steve Waechter: These are not quadcopters, they are octacopters which can still fly (IIRC) with up to two of their eight motors out. And at some point you have to start comparing the hazard of a failing device impacting around four square feet of ground to the potential damage caused by a young kid piloting a clapped out Kia when he's 28 minutes into a half-hour-or-it's-free pizza delivery. It all comes down to risk management.

Posted by: Rush Strong | December 8, 2013 4:51 PM    Report this comment

Yeah, what Dennis said. Drones aren't competing with the UPS tuck, they are competing with next day or same day delivery - a service needed only by a few, and by those willing to pay for it. Would you expect to get free, half hour delivery for a $35 minimum purchase?

I'm surprised that I haven't seen any references to a business located (I think) in a north-east college town, which I read of a month or two ago. Coincidentally, they were a bookseller - but only books, and text books at that. Their idea was to hover around 10-20 feet of the ground, and drop the package down on a string. The buyer would be required to be waiting for it, and the string would disengage from the drone with a sharp tug - this would obviate both the ground damage and drone theft potential. But I think the drones would be piloted. Also, the typical cost of a needed text would probably be high enough to make the delivery charge more bearable in comparison.

To those who worry about merchandise theft, leaving packages to get rained on, etc.: these are deliveries that someone is spending extra on in order to get it as fast as possible. If they aren't going to be there to accept delivery, they wouldn't be paying for the service. Minute by minute status would almost certainly be available via a smart phone app. (And if that isn't being planned, please keep it under your hat - remember, I thought of it first.)

Posted by: Rush Strong | December 8, 2013 5:04 PM    Report this comment

Paul - I know you're making up shipping numbers ($7.00 delivery fee for a UPS truck vs. $30 for a drone). Being curious, I just created an sample order with a shipping weight of a little under five pounds, and a $50+ value. This would qualify for free shipping, but standard ground service (the UPS truck) would be $9.50, next day air would be $29.50. Needless to say, if I was in the next-day market, I'd cheerfully pay the extra two bits for drone service!

(Except that I don't live within 10 miles of anything, much less an Amazon fulfillment center.)

Posted by: Rush Strong | December 8, 2013 6:42 PM    Report this comment

NOTAM - added to the ever-increasing sensitive Nimby areas around your local airport/airpark are now DroneZones - or DZ's. Times of day and altitudes tbd to accomodate UAV's delivering packages to homes at airparks, airport/airpark businesses, nearby apartments, office buildings and shops. Ugh.

Put me in the thanks, but no thanks category. I'm still working on getting the always-rushing young man to throw my morning paper not under the camper in the driveway, but I'm not giving an inch more on our freedom to use our local airports as intended. Hope it fades into the grey like flying cars has, though I know some here are patiently waiting for that paradigm shift.

Posted by: Dave Miller | December 8, 2013 8:56 PM    Report this comment

UAVs are coming. People - especially pilots - should get over it. And they will. Just as elevator-operators, highway toll-takers, and filling-station-attendants did. Can any of us do without same-day delivery of merchandise? Absolutely. We also can (and used to) do without a Star Trek personal communicator in our pockets - but who among us today forfeits their God-given right to carrying a cell phone?

When I buy something online, I either take the cheapest, usually-slowest means of transportation available, or I pay for next-day air - because some machine just went out-of-service, and I'm S.O.L until I get that replacement part. Same-day-delivery? If my operation is dead in the water, my only question is "how fast can you get it here?"

It's a balancing act between need/desire and ability-to-pay. Everybody makes such choices, and I believe that having options available always is a good thing - as long as nobody else gets to make my "choices" for me. Which self-righteous do-gooders always seem eager to do.

In the meanwhile, we're going to get treated to a whole lot of Chicken Little hysteria. Sadly, much of it will come from pilots who ought to know better.

Posted by: Thomas Yarsley | December 9, 2013 6:33 AM    Report this comment

Investing analysts wonder why Amazon.com has such a low profit margin. It's because they are spending every spare dollar to build fulfillment centers closer to their customers, which means this idea is not that far out, since the biggest problem with the drones is their very limited range.

That can/will/must change. It will likely be driven by automobile technology, whose only real obstacle to practical electric cars is the low energy-storage density of batteries. (The military, I see, is solving that through the use of fuel cells in their drones. If the cost drops enough, that may be the solution.)

What is Amazon's only REAL problem? They have to deal with the FAA, of course. The FAA will do everything in its power to get control of such a drone system and suck the life out of it.

Why would they do that? Simple: in the not very far future, drones will be able to communicate and set up their own ad-hoc air traffic control system, integrating with light planes and airliners, to set their own routing and make sure nobody runs into each other. I would envision the entire network in constant negotiation for altitudes and airspeeds, based on aircraft capabilities - jets high and fast, light planes in middle altitudes, Amazon droned just above treetops.

But of course, we can't have that, since it would mean the FAA is IRRELEVANT. They would be like the pilot in the timeworn joke about the airliner piloted by a man and a dog; the man's job being to monitor the instruments and the dog's job being to bite him if he touches anything.

Don't think the aircraft can do that ever kind of George Jetson stuff? They can do it NOW.

As the good-ol-boys here in the South say, "Hey, y'all, watch iss!"

http://www.youtube.com/watch?v=2la4pIyXOEQ

Posted by: James Wills | December 9, 2013 6:59 AM    Report this comment

Don't you just love the term "fulfillment center"?

Posted by: Richard Montague | December 9, 2013 9:20 AM    Report this comment

I'm very fond of my own fulfillment center.

Posted by: Rush Strong | December 9, 2013 10:01 AM    Report this comment

Drone deliveries may become more relevant than even Amazon is imagining right now, and I'm all for it. It will evolve over time, but the idea that high priority, urgent deliveries could be accomplished in dense urban or suburban environments is not hard to justify economically. The safety and security issues will get worked out, as will the reliability, endurance and capabilities of what i imagine will be a vast array of different drones. My biggest beef may be the potential noise from a drone caring a 15 lb box overhead every 1/2 hour! But, is it any worse than the UPS and Fed Ex trucks rumbling through the neighborhood twice a day?

Posted by: Joe Goebel | December 9, 2013 10:05 AM    Report this comment

You may not be able to fly a Piper Arrow 1000 miles for what an airline ticket from a big airport to another big airport costs, and more timely. Compare the cost of a family of 4 and the time required from small town to small town. My turbo arrow will win over 95% of the time. The great advantage of traveling by small aircraft is that there are many small towns in the Boonies with suitable airports. Big problem. Osama, oops, Obama is desperate for Monet to pay for Obamacare. He will push for fees to talk to ATC,ect. Example, at 2 large light aircraft flyins this year the FAA charged the sponsors approximately $50.00 for ATC services, for the first time ever. Talk about inefficiency!

Posted by: James Hodges | December 9, 2013 10:31 AM    Report this comment

I can well see a UPS or similar truck, driving to a shopping mall carpark, in a smallish town or suburb, have the delivery worker pop a switch, the roof open, and a swarm of drones deliver the days purchases to all the houses while the delivery un-manned flight technical engineer (should be worth another buck on the pay check) has a coffee, before either snapping new packages on or shoving the drones back into the charging docks. He / she then drives to the next suburb and repeats. Saves gas, time and labor -- there are reasons (other than tax avoidance) why Amazon went from zero to world leader in less than five years, although with tiny profits and most of them relate to early adoption of new technology....

Posted by: John Patson | December 9, 2013 10:50 AM    Report this comment

You should all take a look at http://matternet.us - this is a real business with real investors building out real world transport systems using ... wait for it ... UAS quadcopter (or quadcopter hybrids). I found this whole concept powerful. I'm thinking Jeff Bezos has been watching these guys (or participating in the project, but I don't know this).

So - in the end it will be feasible and practicable to put something like the Amazon service together. It won't compete against the UPSes or FEDEXes of the world - but it will compete with most other direct from vendor-to-you deliveries. And I'm thinking "developing nations" may see the service before we ever do here in the U.S. of A., too.

Posted by: JT McDuffie | December 9, 2013 5:03 PM    Report this comment

'Everybody makes such choices, and I believe that having options available always is a good thing - as long as nobody else gets to make my "choices" for me. Which self-righteous do-gooders always seem eager to do.'

Since self-righteous idealists and self-righteous narcissists are on opposite sides of the same coin and are never found on these hallowed threads, I wouldn't worry about it. Pilots know better than to display such dull behavior...

Posted by: Dave Miller | December 9, 2013 6:08 PM    Report this comment

Bad prediction. "The concept is interesting and well-formed, but in order to earn better than a 'C', the idea must be feasible." -- A Yale University management professor in response to Fred Smith's paper proposing reliable overnight delivery service. (Smith went on to found Federal Express Corp.)

Good prediction. The Octocopter "Prime Air" delivery service concept by Amazon will be joined by Fedex, UPS and the USPS and it will overcome.

This is definitely more exciting than the demise of the Skycatcher. Imagine the peripheral factors involved on a national daily volume of 2 million package deliveries.

Posted by: Rafael Sierra | December 9, 2013 8:43 PM    Report this comment

Many significant innovations first appeared as outlandish.

Posted by: Frank Hummel | December 9, 2013 10:56 PM    Report this comment

I was most amused by the delivery in the video. Amazon's octocopter flies into the air and descends across an open grass field onto a big patio behind the house with fences, shrubbery, etc., conspicuously absent. Works great in a new high end subdivision in Kansas. Not so much in cities or places with trees, power lines, or the other stuff that tends to clutter up life.

It's a nice way of saying to the world "look how cool Amazon is!", but what comes to mind is the old adage "A properly rigged demo is indistinguishable from magic." (Apologies to Arthur C. Clarke.)

- Andy

Posted by: Andy Goldstein | December 10, 2013 1:53 PM    Report this comment

For Andy Goldstein and interested others, I recommend this 1:02 video: youtube.com/watch?v=2la4pIyXOEQ

UAVs can be quite adept at avoiding obstacles - including other UAVs.

Posted by: Thomas Yarsley | December 11, 2013 5:58 AM    Report this comment

Folks an interesting article on UAS delivery systems but could we refrain from comments such as "WTF" in the editorials and not degrade AvWeb into the modern "trash talk colums" that are becoming quite prevelant in our American society. Just sayin', keep up the great articles. Mike T.

Posted by: Michael Troici | December 11, 2013 6:42 AM    Report this comment

Here's to hoping AvWeb will always ignore the word and thought police and consistently grant its readers the highest benefit of timely, free, creative expression. 'W ow T hat's F antastic!' is really quite benign, anyway.

But how 'bout throwing us a bone and make the poster's name font at least as big as 'Report this comment?' It takes nanotechnology for me to read my fellow pilots' names. :)

Obviously, technology propelled by huge money will be put upon us no matter what. The evaporating middle class will stand in awe, like so many have to do now about personal aircraft ownership and flight. This UAV idea at the retail level just promotes corporate muscle for those with more money than brains or patience. But I'm not unaware it will be foisted upon us, like it or not.

Posted by: Dave Miller | December 11, 2013 1:58 PM    Report this comment

BTW - I fly a Hex drone copter..

Won't happen quite as Bezos imagines. Yes, drones will be introduced into the FedEx and UPS fleet, but not for delivery to homes. The idea of a flying lawn mower would give any insurance carrier chills. Besides those drones would cost well north of one-thousand dollars each (probably more when you add ADSB-Out) and the batteries have a life-cycle limit, plus each would have to be programmed for GPS coordinates. So there is an operating cost involved. What is more likely is a larger drone copter capable of carrying 100-pounds of payload to make a ten or fifteen minute flight from a central sorting center to a neighborhood distribution center. The ground crew would swap the batteries, load an outgoing payload, reprogram the autopilot then send the drone back.

Of course, their DC10's and 747's are already almost drones

Posted by: Stephen Mann | December 11, 2013 2:10 PM    Report this comment

The drone delivery concept reminds me of the old Piper marketing video showing how a lightplane (such as a Tri-Pacer) can be used to make just-in-time parts deliveries to the front lawn of a modern factory. Just swoop in, hand the plant mechanic a couple key parts and the factory is miraculously up and running again. Then, before lunch you can deliver a box of steaks to a restaurant in Nantucket just in time for their dinner rush. And return home relaxed by 5 to a loving family.

Of course we know this all happened.

Posted by: A Richie | December 11, 2013 3:11 PM    Report this comment

@stephen - look at the matternet presentations above. These guys are looking to make this concept the next BIG thing in urban delivery as well as dealing with the "unreachable" with limited access to all-weather roads. And the numbers, including full lifecycle costs, are better then you might expect.

I think the biggest problem is that autonomous drones fly themselves - and as pilots we're not interested in aircraft that fly themselves other then making sure they stay out of our way when we're out and about flying. A teenager who is attempting to impress my daughter will want to drive his own car - but if he were interested in impressing ME, humm, I might prefer a mode of transportation I could program and ensure they get back home on time and without "steaming things up"... Its all a matter of viewpoint, isn't it?

Posted by: JT McDuffie | December 11, 2013 8:25 PM    Report this comment

'I might prefer a mode of transportation I could program and ensure they get back home on time and without "steaming things up"... Its all a matter of viewpoint, isn't it?'

Certainly is. Maybe trusting an autonomous vehicle rather than the kids or their upbringing on the date would soothe you, but it disturbs me to look at it that way. And also, wouldn't there be more time and more freedom to 'steam things up', or partake in other teenage thrills if one didn't have to bother with duties like driving?

For me, it isn't that a pilot isn't on board these airborne mechanical nuisances, it's that as we struggle and beg to keep GA afloat and the middle class from vanishing, corporations or governments (the difference, as you say, is merely a matter of viewpoint) are willingly going along with this sort of thing for either greed, or power, or control, take your pick. And I'm not so easily led.

Posted by: Dave Miller | December 11, 2013 9:51 PM    Report this comment

This is such a silly-a** idea ... if the current radius of operations for the drones is 60 miles from a fulfilment center, a better bet for Amazon (and the customer) is to build future fulfilment centers next to airports and hire aspiring commercial pilots (i.e., "time-builders") to fetch and deliver the "goodies".

If Amazon has "money to burn" on this drone idea, trust me, they have the doneros to underwrite the idea of putting pilot trainees -- our Nation's future airline pilots -- to work. This is something that can be implemented immediately, and avoid years of "cost analysis and feasability studies".

Posted by: Phil Derosier | December 17, 2013 5:42 AM    Report this comment

... and by the way, Amazon two fulfillment centers in Delaware within a rocks-throw of airports: New Castle (KILG) and Middletown (KEVY) ... c'mon, somebody out there tell me where I'm wrong.

Posted by: Phil Derosier | December 17, 2013 5:50 AM    Report this comment

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