The Drone Biz: Still Waiting

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As trade shows go, AUVSI’s bash—held this week in Dallas—is bigger than AEA, but smaller than NBAA. But it’s a lot more glitzy than either of those. When Intel—that’s $60 billion a year Intel—shows up to play on stage, they open their checkbook.

Walking the show floor, there is so much stuff and so many tech goodies that it’s easy to think, wow, compared to traditional aviation, this industry has arrived. The potential seems exponential, which is why AUVSI named the show just that, dropping the e just to frustrate my spell checker. But curiously, there’s an undercurrent of impatience in this industry and you don’t have to dig deep to unearth it.

The AUVSI crowd is exceptionally engageable. At every turn, I had conversations at various levels of the industry and exchanged business cards with a few of them. I’d always ask: “How’s business? Do you have a lot of activity and demand?” If I could characterize the answers in a single phrase, it would be “still waiting.” For this video, I talked to Dave Paden, who’s developing UAV powerplants for beyond-visual-line-of-sight operation. He’s been at it a while and there are inquiries, but no business has been forthcoming and I could sense his frustration. This story could be repeated dozens of times over.

What’s going on? It’s the mirror image of the general aviation market, which is lamenting faded glory and declining demand. The drone industry is lamenting a market that just hasn’t gelled yet. The reasons for this are several. Regulation is one. The FAA still has a fairly tight lid on Part 107 operations and the beyond-visual-line-of-sight market, which will unleash larger, more capable drones, remains illusory. The technology isn’t there because there aren’t refined technologies for detect-and-avoid, much less certification standards. On Wednesday, FAA Administrator Michael Huerta said the agency is just getting around to that now.

When I was sitting through the panel discussion on delivery drone technology, I was struck by the fact that Amazon is on its 20th drone prototype, can’t really test significantly in the U.S. and still has some critical technical details to work out, not to mention no certification standards they can work toward. In other words, don’t get in a hurry here; it may be a while. You could read the frustration in that panel, too.

I talked to a few Part 107 operators trying to make a go with aerial work for small drones. They’re finding the work, but not a lot of it. That suggests to me that either (a) people who want and could use such services don’t understand what’s available or (b) just not that many businesses and people resonate with the potential of eyes in the sky or (c) something else. I would expect this demand to build as drone businesses get better at marketing and sales, but the market is likely already vastly over-served. Huerta said there are about 60,000 small commercial drones on the registry already and more than 40,000 pilots qualified to operate them. That’s a lot of wedding, golf course, real estate and car dealer photography.  

Predictably, there’s already a shakeout in progress. Although 2016 was a record year for small drone sales, French manufacturer Parrot announced a major retrenchment and layoffs because of narrow margins in the consumer business. At Xponential, it was touting a new focus on small commercial drones. 3D Robotics, a U.S.-based drone maker, announced similar cutbacks last year, no doubt stressed by intense price competition from the market leader, Chinese-owned DJI. GoPro rushed into the market with its Karma, only to stumble with technical problems.

At AUVSI, two topics were constantly afoot: BLOS or beyond-line-of-sight operation and counter-drone technology. The two are loosely related. I saw a lot of eye rolling when BLOS was mentioned, not so much in skepticism as in frustration. I think many in the industry are just resigned to the fact that they have no idea when it will happen, while simultaneously being confident that it will. I’m confident that it’ll happen, too. Someday. In counter-drone, a risk no one seems even remotely able to quantify, some 65 companies have entered the field. It’s kind of perverse, in a way. Just as fast as companies are struggling to field drone systems, an entire segment is standing up to knock them down.

It’s a Man’s World

One thing I found striking about the unmanned industry is that it’s almost exclusively manned. Which is to say gender diversity ain’t its thing. I just did an informal count of how many women were in the industry based on show attendance and came up with under 10 percent. The official number, as presented briefly at one of the keynotes, is a dismal 3 percent.

This is obviously an artifact of the broad shortage of women in the STEM fields, but I also think it’s more acute in the drone biz. I have no idea why this is so, but an amusing offshoot of it in the clever ad I’m reproducing here appeared, as far as I can tell, above every single urinal in the Kay Bailey Hutchison Convention Center. And that means every guy there saw it, because everyone eventually has to pee. It drew frequent comments and I’d be surprised if there was an equivalent in the women’s bathroom. It made for amusing reading while you’re holding … well, you know. I thought it was an exceptionally creative advertising gambit.

It’s also a bit of a circle closer. The University of North Dakota is advertising its well-regarded drone testing services, including an officially approved drone range. It’s one of the few places where you can fly a BLOS drone in the U.S. I hear they’re getting as much business as those urinals were.

Comments (14)

I'm beginning to think you need to change the name from AVweb to UAVweb.

Posted by: Richard Montague | May 12, 2017 7:03 AM    Report this comment

Great analysis, Paul.
*****
The design engineering profession has skewed heavily toward testosterone throughout my life. An observation: the closer a project is to the "bleeding edge," the more-pronounced that skew is. An associated observation: I've never seen evidence that the skew was caused by or exacerbated by bias or discrimination.

Posted by: Tom Yarsley | May 12, 2017 7:25 AM    Report this comment

UAVweb. The only game in town. Follow the money. Playing the numbers. Good call Richard.

Posted by: Rafael Sierra | May 12, 2017 7:32 AM    Report this comment

Last one Richard. "What you should know" about UAVs.

Posted by: Rafael Sierra | May 12, 2017 8:00 AM    Report this comment

OH NO! Now the halls of UAVdom are filled with mysogynists, too. Give me (us) a break! You're gonna rile up those people who dress up as pink vaginas and they'll be protesting at every AUVSI event and burning and looting the booths. If god had intended women to build or fly UAVs, he wouldn't have invented dolls. (DEFLECTOR SHIELDS: ON!)

Next thing we know, some guy will invent a UAV representative group ... something like the Unmanned Aircraft Manufacturers Assn -- UAMA -- and start telling us all how superb UAV's are and how well the market segment is doing, too. (Kinda like that LAMA guy).

Now then, I gotta go back down into my design center in my basement to get back to work on the sub-system I'm designing for the billionaire who wants to fly to and establish a vegetarian settlement on Mars (google it).

Somewhere in the last week, I read where some institution of learning is doing research into how much body damage a UAV will do if it runs into a human. I wonder if they've considered if one FALLS on your head due to being shot down or commanded down? You mark my words, the malevolent among us are gonna discover UAV's and when they do ... Katy bar the door.

Could it actually be that there's little interest in UAV's because -- well -- there's little real interest in UAV's (aside from Yars?). It sure isn't because a decent one costs $400K. If I had one, I'd likely only use it to torment my dog.

Posted by: Larry Stencel | May 12, 2017 10:59 AM    Report this comment

Larry, re: tormenting your dog, has your laser pointer run out of batteries or has the dog figured it out.

The lawyers are salivating at the thought of someone getting bopped on the head by a drone. Maybe they will become known as UAV chasers. Some people can make lemon-aid out of lemons, lawyers stand make lots of $ out of UAV inflicted injuries.

Then too, that is why we buy insurance. We are betting that our UAV will bop someone the insurance company is betting that it won't. What is certain is that someone out there will get bopped. Hey Bubba hold ma beer and lookie here.

Posted by: Leo LeBoeuf | May 12, 2017 11:07 AM    Report this comment

Leo ... didn't you get the memo? Laser pointers are for cats. UAV's are for dogs.

"UAV chasers." Superb! Those 'For the People' folks are probably on it right now.

You've brought up a very salient point, however, Leo. What if YOU are flying a UAV and it comes around and bops you in the head ... who pays THEN? It'll become just like the civil disobedience aboard airliners ... people will buy UAV's just to fly 'em around and bop themselves and become rich overnight.

But ... now that I think about it ... the UAV folks will be happy because they'll sell a lot of 'em and the UAMA guy will have lots to write about.

Posted by: Larry Stencel | May 12, 2017 11:35 AM    Report this comment

Larry, I can see you're on you way to getting your Cirrus.

Posted by: Thomas Cooke | May 12, 2017 8:25 PM    Report this comment

By the looks of their ads, I think these UAV guys will have to move beyond puberty before anyone will be taking them very seriously.

Posted by: Ken Keen | May 12, 2017 8:35 PM    Report this comment

One of the problems with the UAV market is customer decision maker expectations and sticker shock. A recreational (a.k.a "toy") drone can be had for a modest sum. However, when looking to a UAV for serious business work, the price tag becomes well, aviation expensive. The sensor systems, robustness and limited production work to drive costs.

To the average business or government manager the expectation is for a "toy" system cost, When the bid comes in, then comes the sticker shock. From there the idea goes down in flames. Eventually, this will lessen but the costs will still be high. Proving the value added by using the UAV will take some time. There will be pioneers out there but in the mean time, the industry will be hanging around waiting for the decision makers to get on board.

I think that the agriculture industry has see the value of the systems and products (data and hardware). Many potential customers will have to really do a hard sell to their management. Do you buy a new fire engine or a UAV system? Do you buy a new piece of heavy construction equipment or a UAV to inspect bridges? Do you keep profits or put some into UAVS? These are the decisions that will drive UAV purchasing decisions.

Posted by: Leo LeBoeuf | May 13, 2017 9:40 PM    Report this comment

Someone has to say it. UAVs will prove to be a hoax.

Posted by: Rafael Sierra | May 14, 2017 2:54 AM    Report this comment

"Get a horse," Raf?

Posted by: Tom Yarsley | May 14, 2017 4:27 AM    Report this comment

For a better understanding of my view of UAVs YARS, I see a forceful drone influence on the horizon with unlimited applications. I don't like the threat they pose by the unskilled and ignorant operators but I freely admit that they are emerging as interestingly useful in science and industry.

Posted by: Rafael Sierra | May 14, 2017 12:51 PM    Report this comment

That threat needs to be geo-fence constrained.

Posted by: Tom Yarsley | May 15, 2017 4:47 AM    Report this comment

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