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Commercial Drone Markets: 2014 Year in Review

Judging by the headlines, 2014 turned out to be the year for drones. I referenced in Tweets a total of 503 articles with the word ‘drones’ in the headline last year.  A Google search brings up about 61.4 million results referring to ‘drones.’  Granted, that search includes references to military and hobby drones, but it still delivers higher results than other years.  If the first theme of 2014 was the rise in popularity of drones, the second theme was how hamstrung the commercial markets are in the U.S. because of a lack of regulations. But there’s more going on than the buzz and frustration with FAA progress; in this post, I’ll review what I think were the five most significant commercial market trends for drones in 2014.

‘Drones’ Got Hyped

As mentioned, 2014 brought lots of hype about drones in the media, and investors can’t tell fact from fiction.  Here’s one example where a writer and industry analyst asserts that the civilian commercial market for unmanned aircraft systems (UAS) will dwarf that of the military. But the evidence shows otherwise. My colleague Mitch Solomon summarizes the problem well in this article:

“Venture investors have a huge variety of questions about the commercial drone market, but two stand out in terms of their importance.  The first is: what is hype and what is reality?  Put another way, is this market really a big, high growth, high margin market?  If you rely solely upon media hype and AUVSI [Association of Unmanned Vehicle Systems International], your answer would be an unequivocal: yes, the commercial drone market is the biggest, highest growth, best new market opportunity to come along in decades (or maybe centuries…AUVSI shows the US commercial market at over $1 billion in the first year after regulations are approved by the FAA.  (Really?!).”

Like Mitch, I’m not so quick to buy the media hype or AUVSI’s forecast (for more on that, see this article), and my market view is much more pragmatic and measured. Still, if tier-one venture investors are asking questions about the hype, then that is a good sign. It means that while there is interest in the space, investors will need to work smarter to make sure capital won’t be wasted chasing fictional opportunities.

Oil and Gas Inspections in the U.S. Got a Frivolous Beginning

While drone inspections of land-based refinery flare stacks have been permitted in other countries for some time, it wasn’t until June of this year that the FAA granted permission for the first commercial drone for this industry in the U.S.  Problem is, it wasn’t for the same purpose. That permission went to oil company BP and drone manufacturer AeroVironment to fly aerial surveys of over Alaska’s North Slope.

The lack of real-world consequence of this permission is best stated in this article. Until June, the FAA has approved drones for public safety, such as police or firefighters, or for academic research, on a case-by-case basis. Most of those cases were for use cases similar to flare stack inspections (perch and stare) and were for small, versatile drones with relatively low-cost technology.  But this was for an expensive 10-year-old military spec fixed-wing drone that has limited commercial viability. As the article states:

“The FAA is essentially using the military’s prior experience with this specific drone platform in place of the agency’s airworthiness certification requirements, so it is not an option for people hoping to use the newer drones being designed by high-tech startups that are not involved in military applications,” [Brendan] Schulman said. “It is a small step in the right direction but really only for companies who want to operate in very remote locations using military surplus equipment.”

Drone Cinematography Came Out of Shadows

As this research points out, filmmaking, video, and photography drones have flown commercially without FAA authorization for years now.  It’s no surprise, then, that this is the biggest and most mature commercial market for drones. Notwithstanding, drone regulation was among many issues the Motion Picture Association of America (MPAA) lobbied on in 2012 and 2013, at a total cost of $4.11 million. The MPAA has been constantly appealing to the FAA to let them use smaller drones for film-making purposes. It seems that lobbying paid off.  In September, the FAA granted regulatory exemptions to six TV and film production companies to operate drones on sets: Astraeus Aerial, Aerial MOB, HeliVideo Productions, Pictorvision, RC Pro Productions Consulting, and Snaproll Media.

There is a catch here.  Operators are required to hold private pilot certificates. This has many scratching their heads.  Why do commercial remote control operators need to learn how to land a Cessna when they’ve been operating these drones safely for years as ‘hobbyists’ without that requirement?

Agricultural Drones Got A Reality Check

A reality check is an assessment to determine if one’s circumstances or expectations conform to reality.  This certainly is the case with the market for agricultural drones.  It needed a reality check because of the hype created by AUVSI study titled The Economic Impact of Unmanned Aircraft Systems Integration in the United States. It claims precision agriculture and public safety will make up more than 90% of the market growth for unmanned aerial systems. The report confidently states, “…the commercial agriculture market is by far the largest segment, dwarfing all others.”  To this day, that fiction gets repeated over and over again in the media.

The market potential for drones in precision agriculture needs vetting—see Film or Farm: Which is the Bigger Drone Market? – Part 2 for my thoughts on this. It’s not yet clear how a UAS can deliver more usable data to a farmer or provides a cost benefit over the existing image solutions available to them today. But don’t take my word for it–watch this video of Rory Paul at the 2014 sUSB Expo for his take on the misconceptions about this market.

The GIS Market Heats Up

Back in the spring, GIS software market leader Esri published this article about how drones greatly benefit the work of professional surveyors and mappers.  Devon Humphrey states it clearly:

Due to the unique flight characteristics of UAVs, the imagery is sharper and offers some unique advantages. This means that the camera captures high ground resolution on the order of two to five centimeters. In addition, because there is a large amount of overlap in the imagery, digital photogrammetric processing results in 3D point clouds of similar resolution. Turnaround time is a few hours, instead of days, weeks, or months in the case of traditional delivery times. The user also controls the process rather than working with an outside vendor or being stuck using “day-old donuts,” generic imagery that doesn’t meet the temporal requirements.

He is not alone in that assessment. I think this market is heating up to become the second biggest commercial drone market behind aerial photography and cinema and ahead of precision agriculture. In a nutshell, I believe the GIS market will continue to grow rapidly because drones provide a technical advantage over incumbent aerial technology and incumbent technology costs more.

What should we expect in 2015?

A lot depends on the forthcoming small drone rule from the FAA.  If it looks at all like the exemptions granted this year (which have onerous restrictions), then U.S. commercial market growth will be seriously hampered.  This should be no surprise to anyone.  Much has been written on how government regulations hinder economic growth (for example here and here).  Still, in other countries with smarter regulations, expect these and other markets to continue to flourish and those over here will be looking at the success stories with envy.

You can find more insights from 2014 on these SlideShare presentations.  I would love to hear your thoughts about the commercial drone markets. Feel free to comment or write me at colin@droneanalyst.com.

Image credit: Shutterstock

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Why Drones Are the Future of the Internet of Things

What if you could talk to a drone?  No, seriously.  You can already talk to a locomotive, so why not talk to a drone?

For those of you following the technology, you already know that unmanned aircraft systems (a.k.a. drones) are finding their way into Internet of Things (IoT) implementations. IoT applications are typically composed of:

A sensor “at rest,” e.g., on a highway or a bridge or a thermostat that gathers input (like weather conditions or seismic activity) A connection (via the Internet) between the sensor and a back-end data collection infrastructure A back-end data collection infrastructure that’s commonly based in the cloud

So why do I claim that drones the future of IoT? For one, drone technology is evolving very rapidly. Drones are already beginning to efficiently replace the connected sensors at rest with one device that is:

deployable to different locations capable of carrying flexible payloads re-programmable in mission able to measure just about anything, anywhere

To illustrate the trend and these capabilities, I’ll highlight the developments of several companies. But first – so that we are all on the same page – let’s look at what I mean when I talk about drones.

A New Kind of Drone

All drones are not equal. Some like the Global Hawk are very complex systems that are connected to satellites and are only the purview of the military. Others like the Parrot A.R. Drone are mass-produced hobby aircraft that you can control with your mobile device.  But a class of drones in the middle combines the capabilities of both complex and mass-produced systems and is specifically designed for commercial purposes. These drones weight less than 55 lbs. and are classified by regulatory entities as small unmanned aircraft systems or sUAS.  We don’t see their ubiquitous use in the U.S. quite yet, but in countries like England, Australia, and France, you will find them operating in energy, mining, mapping, and surveying companies – and quite a few government agencies like those responsible for transportation and infrastructure.

Commercial drones are truly ‘unmanned aircraft systems’.  They are not just remote controlled aircraft.  They require many things in order to run, like avionics, ground control stations, communication systems, data collection and processing software, and of course GPS for geo-referencing. There’s more, but you get the idea. These are multifaceted complex vehicles whose mission is to fly sensors and collect data.

Commercial drones are also connected devices. So they are ‘things in motion’. Most are accessible or controllable over the Internet, and the data they collect is pushed to various cloud services. Some drones are beginning to carry on-board processors as well and are now part of the growing trend of fog computing devices.

Deploy a Fleet

So, if a commercial drone is a connected device, then shouldn’t you be able to ‘talk to a drone’?  And shouldn’t you be able to – from your smartphone in California –control a drone in, say, France?

You can.  And it’s because companies like DroneDeploy and U|g|CS have figured out how to make addressable drone management platforms that control multiple drones from anywhere on any device.  DroneDeploy does it by marrying a simple 4G telemetry device to a drone’s avionics.  This enables real-time data transmission, processing, and sharing. With this kind of hardware and software combination, you can plan missions (launch, go to point A, then point B, then to point C, etc.) in a browser, upload them to a drone anywhere, press start, and away it goes.  You could do that with a fleet and monitor them all in flight.

Flexible payloads

So one of things commercial users want is the ability to mount different sensors such as thermal imaging, UV or multispectral cameras, sniffers, and microphones to sUAS. PrecisionHawk figured out early on how to offer an array of sensors that are hot swappable and just snap into place. The cool thing about their aircraft is that the body itself is made of circuit boards and processors.  They’re hardened of course on the outside, but it’s an example of the innovation happening in the commercial drone industry.

Reprogrammable in mission

So, not only can you deploy these anywhere, but they are reprogrammable while on a mission.  Let’s say you wanted to create a 3D map for a construction project and you programmed it to run its mission but in the middle you noticed something odd (because you are looking through the camera in real-time on your laptop or smart-phone). With SenseFly’s drone software, you simply point to that area on the map, and you can:

divert the drone command it to perform another function in that area then resume and complete its first mission then come home and land

Measure just about anything

Every day, you can read about how measurement sensors are getting smaller and lighter. Such is the case with LiDAR, which allows you to capture minute details and measurements.  Because these units have been heavy up to now, there have been only three choices if you wanted these sensors to measure something:

They had to be stationary They could be roving (stationary on a truck or SUV) They could be carried on a manned aircraft

Stationary is the most accurate but lacks the significance of an aerial perspective.  You can get good results from aircraft, but not as good as from a drone.  With a drone can get close to the object – and as I mentioned they can be deployable on-demand. LiDAR manufacturers like Riegl and Velodyne get this, and we now see offered in the GIS market new high-performance, remotely piloted aircraft system for unmanned laser scanning, like those from Phoenix Aerial Systems and Sabre Systems. These airborne platforms provide full mechanical and electrical integration of sensor system components into aircraft fuselage.

LiDAR data models are huge, but as more low-cost in-memory computing becomes available, service providers are storing the models in the cloud and then updating them to reveal changes over time. Of course, it’s the analytics on top of that that provides the real insights – insights like structural integrity and predictive failures.  Soon, multiple infrastructure sensors – like those found on bridges and highways – will be obsolete.

What’s next?

We are only beginning to find out how drones can be used to replace multiple sensors, and hopefully I’ve successfully convinced you of how drones play into the future of the Internet of Things.  Surely this technology will push the bounds of how we can measure and analyze ‘things at rest’ and ‘things in motion’ and how they can interact with both of them.

You can find a companion SlideShare presentation to this post here.  I would love to hear your thoughts on this topic. Feel free to comment or write me at colin@droneanalyst.com.

Image credit: Shutterstock

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Does DJI’s New Drone Hit the Target Market?

I think it’s futuristic – the drone that is.  The camera, on the other hand, is another story.

The drone

For a guy like me who not only follows the commercial market for drones but is also an avid photography and multirotor enthusiast, the new DJI Inspire 1 is, well, inspiring. It’s chock full of features I wish I had four years ago when I first started mounting GoPro cameras on quadcopter kits — things like ease of use, a simple interface, controller ergonomics, telemetry, a 3D-axis gimbal, integrated HD video downlink, optical flow for indoor flying (how cool is that!?).

Much has already been written on the Inspire 1 T600 (like here and here) so I won’t repeat it.  The question for this post is: Did DJI hit the mark for the target market?  For that answer, we need to go beyond the drone itself and look at how professional photographers and videographers use drones and cameras.

The market

As a primer, you may want to read what I have already written about this market in Film or Farm: Which is the Bigger Drone Market? and The Democratization of Aerial Photography.

Drone manufacturers understand photographers have longed for inexpensive ways to take aerial images, and DJI heralded the turnkey consumer-level camera drone with its DJI Phantom Vision. Some billed it as a toy. But it didn’t take long for professional photographers to notice its package of features and ease of use. Soon, every camera retailer, from Adorama and Amazon to B&H Foto, carried the Phantom line. Even photography software companies like Adobe tailored offerings to it. Product sales skyrocketed.

Concurrently, drone manufacturers like DJI and FreeFly Systems created larger multirotor airframes, controllers, gimbals, and componentry to satisfy the growing market for high-end aerial photography and cinematography.  On these machines, users can mount their favorite (and heavy) Sony, Canon, and Panasonic DSLR – and even Red Epics. However, these drones do not arrive ready-to-fly (RTF).  They require considerable assembly to get operational.  This left the door open for savvy resellers like Aerial Media Pros, DSLR Pros, and Quadrocopter to do that work and offer high-margin RTF packages.  Besides video and cinematography, these packages are used for the following photo applications:

REAL ESTATE – showcase homes, marquee properties, commercial buildings, and structures LEGAL – support forensic investigations, insurance claims, and property assessments CONSTRUCTION – progress reporting for commercial, residential, and civil engineering LAND – landscape architecture, land development, and research

I think DJI correctly assessed the entry level and high-end camera drone markets and recognized the middle was open.  Why not offer a better turnkey package that satisfies the demands of professionals but does not cannibalize their own high-end products?

The camera

For professional photographers and videographers, it’s not about the drone; it’s about the camera. The drone is just an extension of their reach. It’s a camera platform, a flying dolly, a zooming boom, a tripod in the sky.  Mounted on a drone, a camera becomes a tool for better storytelling, and its unique aerial perspective broadens the possibilities for those stories and gives audiences a better sense of an object’s physical space and context to location. As a tool for this kind of storytelling, camera resolution matters.

But herein lies the rub for the Inspire 1 T600.  The drone has very high-end features, but the camera (see specs here) may not satisfy all intended professionals.  Clearly, 4K video meets the needs of a large population of aerial videographers, but 12-megapixel still photos will not meet the needs of aerial photographers involved in supplying images for the applications listed above.  It will if the image is destined only for the web, but not if it’s used in print (think real estate brochures) or detailed investigative work (like construction exploration, legal investigations, and land surveying).

Two factors are unknown about the T600’s camera at this point: the resolving power of the lens and the dynamic range / image noise.  These two issues matter greatly to photography professionals, who will surely scrutinize and vet these over social media.  No doubt comparisons will be made between cameras of all types – including the one on the less expensive Phantom 2 Vision+.  On the surface it looks like DJI may have got the lens right.  Apparently gone is the DJI Phantom 2 Vision+ wide-angle distortion that professional photographers and videographers had to correct post production (same problem with GoPro).  Low light sensitivity and noise is TBD.

The upgrade?

It’s hard for me to believe DJI didn’t know that still image resolution didn’t matter for the target market and it’s quite plausible that a better or different camera is coming.  And it should!  I have talked to several existing Phantom owners who are professional photographers and many say they’ll wait to buy one when a better / more versatile camera is available.  As DJI explained at its press launch, the Inspire 1’s gimbal and camera system is “modular and upgradable.” That’s important if the company wants to keep up with professionals who demand ever better sensor and image processors.  Whatever the reason, it’s paramount that DJI get this right – especially if it wants to provision other commercial markets like GIS where the camera’s still resolution is king.

While the $2,900 price point is set right for a mid-tier turnkey camera drone system, it seems the camera spec is too skinny and the price just high enough to create a barrier for some existing customers, especially those who are professional photographers.

I would love to hear your thoughts.  Feel free to comment or write me at colin@droneanalyst.com.

This post also appears in sUAS News ‘The Market‘.

The post Does DJI’s New Drone Hit the Target Market? appeared first on Drone Analyst.

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GIS: The Biggest Little Drone Market in the World

Last week I had the pleasure of participating in a two-day symposium on unmanned aircraft systems (UAS) hosted by the Northern California American Society for Photogrammetry and Remote Sensing (ASPRS).  The event was held in Reno, Nevada, (otherwise known as “The Biggest Little City in the World”), and its purpose was to assemble UAS experts and enthusiasts to share information, showcase new technologies, and demonstrate systems in action – systems that support geographic information systems (GIS).  Presentations covered a wide range of topics, including everything from vehicles, to software, to data collection, to workflow, cameras, and sensors. You can find my presentation here.

By all measures, this event was a success. With more than 500 attendees, the symposium included presentations on a wide range of topics including vehicles, to software, to data collection, to workflow, to cameras and sensors and an afternoon of UAS demos.  But what struck me most about the symposium was not just the participants’ level of sophistication and knowledge (it was very high), but also the suitability of drones for the mapping and surveying market. In this article, I’ll explain why I think this market will be the second biggest commercial drone market (behind aerial photography and cinema and ahead of precision agriculture) by telling you three things I learned about how GIS professionals see and use drones.

Drones are a perfect fit for GIS – A geographic information system (GIS) lets you visualize, question, analyze, and interpret data to understand relationships, patterns, and trends. GIS benefits organizations of all sizes and in almost every industry. So, GIS professionals, like those who are members of ASPRS, are no strangers to aerial imaging.  They know cameras and aircraft – and surprisingly a lot about drones. When I asked the audience by show of hands how many are familiar with drone technology and have remotely piloted a drone, more than half said they were familiar and had been a drone pilot. This stands in sharp contrast to the audience of the large agricultural drone show I attended over the summer where most attendees had never flown a drone and were unfamiliar with the technology – let alone cameras.

As a profession, most of this audience does photogrammetry.  They are image producers.  As a profession, farmers are consumers of images. For the unschooled, photogrammetry is the science of making measurements from photographs. The inputs are georeferenced photographs.  Up to now these have been taken from manned aircraft or satellites. The output is typically a map, drawing, measurement, or a 3D model of some real-world object or scene. Since photogrammetry is used in fields like topographic mapping, architecture, engineering, manufacturing, quality control, and geology, the accuracy of images matters to these professionals.  What matters to their customers is whether the output is timely, rich, localized, and problem-specific.

So, what better way is there to get all that done than from a drone?  None.  Low altitude small drones provide an advantage over incumbent aerial technology for GIS work.  The images from these drone sensors are more resolute, can be captured more frequently, and cost less to produce.  GIS professionals are willing to spend a lot of money on drone systems — they already spend about $40K for a complete ground-based GPS rover system and more than $100K for 3D laser scanners.  So, the idea of spending up to $100K for a turnkey unmanned aircraft system is not out of line — and drone vendors know this.  That’s why those that exhibited at this event showcased their high-end turnkey systems.

GIS professionals need good drone software – There is a growing interest in and awareness of the economic and strategic value of GIS for the Global 2000, as witnessed by the recent integration partnership between Esri (world’s largest GIS software vendor) and SAP (world’s largest enterprise application vendor). But the race to the top is for the software front end to that enterprise piece. The part that mappers and surveyors use on a day-to-day basis—including  software like work management, flight controls, mission planning, aerial capture, post-processing, and mapping, and modeling.

There were more than 25 software vendors at this show – each with a bit of news.  Some of the most interesting came from DroneDeploy and Google.  DroneDeploy announced the first drone software capable of creating orthorectified maps in real time. Users have typically had to wait for four to six hours for maps to be created from drone imagery, but now they can get real-time aerial maps. This will save operators hours every time they fly their drones, and enable better decisions, as data can now be verified during a flight instead of hours or even days later as is the case with existing systems. DroneDeploy is able to achieve this real-time stitching because the drones its product manages are all internet-enabled and use cloud infrastructure for the processing.

The other interesting news from the event came from Google.  Its soon-to-be-released Earth Engine product can now mix the world’s satellite imagery with UAS images — along with trillions of scientific measurements dating back over 40 years — and make it available online with tools for scientists, independent researchers, and nations. All of whom can mine this massive warehouse of data to detect changes, map trends, and quantify differences on the Earth’s surface. Google has already worked with Skycatch and opened up the engine to other partners, so expect to hear more as they go to full-scale launch.

LiDAR drones are here

Mapping and surveying professionals love LiDAR.  They love it because it allows them to capture minute details that photos can’t — and with those details create precise digital representation of objects, buildings, and the ground. LiDAR is based on the same concept as RADAR, but it uses laser light instead of radio waves. By sending out laser beams in all directions, collecting the reflected energy, and performing some nifty high-speed computer processing, a scanner can create a real-time, virtual map of the surrounding area.  These representations have many uses.

But most LiDAR units are heavy and – up to now – had to be mounted on trucks or manned aircraft.  So over the past couple of years manufacturers like Riegl and Velodyne have reduced the size and weight of their units such that that it’s now possible to mount them on large multicopters.  Additionally, these same vendors sell or partner to sell their own dedicated drones, thereby ‘vertically integrating’ (no pun intended) their scanner offerings.  By coupling novel drone-mounted LiDAR systems with vision cameras, advanced computer processing, and GPS, it has become possible to create a remotely piloted flying LiDAR scanner. These vendors were at the show as was Phoenix Aerial Systems and XactSense, both of which have LiDAR drones.

What’s next?

What will be the next innovation for this market?  Well, maps of navigable drone highways in the sky, for one.  These would be aviation maps that would help pilots of manned aircraft know where not to fly. This BHAG is already being taken on by SkyWard, which just introduced the Urban SkyWays Project and the first end-to-end demonstration of a commercial drone network operated with full regulatory compliance. After that? Who knows.  One thing is certain: I expect to see the vendors that attended this symposium continue to innovate in big ways.  Stay tuned.  In the meantime, feel free to write me at colin@droneanalyst.com and tell me what you think about the market opportunities.

This post also appears in sUAS News ‘The Market‘.

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Drone Delivery: By The Numbers

What do medicine, batteries, and forgotten anniversary gifts have in common?  They are the most likely items consumers will want delivered by drone once that service is available.  At least, that’s the verdict from the consumers I surveyed in August and September of this year. In my post Drone Delivery: How Much Would You Pay?, I ran a poll with three simple questions:

What’s the maximum amount you would be willing to pay for a package delivered by drone? Which of ten items would you want delivered in 30 minutes? Under what circumstance would you need something so quickly that you’d pay top dollar for it?

These are the topline results.  You can see the companion summary presentation with more complete graphs and charts of the data here.

The max you’d pay?  First, I wanted some base data on how much people would pay for drone delivery.  So, I asked if consumers were willing to pay for the service and whether they wanted to pay a flat fee or a percentage of the price of their purchased items.  More than three-quarters of respondents (82%) told us they would be willing to pay (vs. 18% who said they wouldn’t), and the largest majority of those who’d pay (62%) said they would prefer paying a percentage of the item’s purchase price (vs. 18% who said they would rather pay a flat fee).

When we asked those who were willing to pay for the service how much they would be willing to pay, we saw big differences in preference. For instance, as I mentioned, only 18% of respondents said they’d prefer a flat fee, and 80% of those people said they wouldn’t pay more than US $50 for delivery.  That’s not a lot more than express overnight delivery fees. I doubt these consumers will be using fixed charge drone delivery services.

For those respondents who indicated they’d pay a percentage of an item’s price, more than half (51%) said they would pay up to 10% of an item’s purchase price.  Most of the rest (43%) said up to 20%, and only 6% said up to 30%.  It seems that a percentage charge could leave a delivery service with losses if the delivered items aren’t high priced.

Items you’d want delivered?  Second, I was curious to know what items consumers would likely purchase and want delivered by drone. I reviewed online shopping trends to find most popular product categories and top purchase drivers – keeping in mind the items had to fit the following drone delivery requirements:

The order must be small enough to fit in the drone’s cargo box The items must weigh less than 5 lbs.

There were clear winners and losers in the list of items consumers would want delivered in 30 minutes or less (see Figure 1).

FIGURE 1 – Which of 10 Items Would You Want Delivered in 30 Minutes?

Drone Deliver Fig 1

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