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Five Reasons the AUVSI Got Its Drone Market Forecast Wrong

My guest blogger is Mitch Solomon of Aironovo and this is an excerpt from his post which we developed together. You can find his post here.

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Since its publication in early 2013, AUVSI’s The Economic Impact of Unmanned Aircraft Systems Integration in the United States has become the gold standard forecast for the commercial drone market, garnering media attention typically reserved for celebrity weddings and babies born to royalty.  Its primary forecast is that the UAS market will reach a whopping $1.14 billion [1] in the first year after the FAA issues favorable regulations and that the precision agriculture market will “dwarf all others.”

The accuracy of these predictions is enormously important. A lot of people – tens of thousands, if not more – have been relying upon them for big decisions like, “Should I leave my job to start a drone company?” or “Which market should my company pursue?” Commercial drones are not just cocktail party conversation–they are increasingly driving the flow of capital and labor, and impacting many lives in the process.

Inquiring Minds Want To Know

Recently, however, a growing chorus of industry observers has started to ask questions about the reliability of AUVSI’s findings. This post is a good example. These individuals, many of whom are among the true pioneers in commercial UAS usage, can best be characterized as enthusiastic but pragmatic UAS evangelists who don’t want to see unwarranted hyperbole lead to unmet expectations.  Many realize that initially overhyped industries never recover because customers, investors, and employees who were burned in the initial wave of unmet expectations are difficult—if not impossible—to ever win back.  They are passionately committed to the industry’s success and believe that rational expectations are a key part of it.

With no axe to grind or agenda to advance, I [Mitch Solomon] partnered with Colin Snow @droneanalyst to explore whether the skeptics and pragmatists were on to some something.  We felt our combined backgrounds in market intelligence and tech market strategy would give us a reasonable set of expertise to draw upon and would help others form a more balanced opinion of AUVSI’s forecasts.  So over the past several weeks, we’ve been carefully reviewing AUVSI’s report, as follows:

Compared their research methodologies to what we believe to be best practices in market research based upon our own experience. Conducted an in-depth interview with the researchers themselves, so that we could directly ask them questions about their methods and results that were not made clear in the report. Initiated a follow-up discussion with AUVSI leadership to understand their perspective on the report and its origins. Performed intensive primary research with about 20 carefully selected professionals in the field of precision agriculture to understand their UAS adoption plans, since the report’s findings are almost entirely based upon rapid adoption by American farmers.

We then synthesized our findings into the following five conclusions about the report and its reliability.

Research Can Be Objective, But Don’t Assume It Is

First and foremost, every reader of AUVSI’s report needs to understand that it is not an objective piece of research.  The report was commissioned not to paint an accurate picture of how the commercial UAS market is expected to evolve, but to give the 50 states and their elected officials the data they needed to:

lobby for funding during the now completed FAA-sponsored competition for UAS test sites, and push the FAA to move more quickly on the integration of UASs into the national airspace.

These are certainly worthwhile goals, and AUVSI should be commended for pursuing them.  But as a direct result, the implicit (if not explicit) mission for the two researchers who did the work was to come up with the biggest numbers – the largest market, fastest growth rates, and biggest costs of delaying integration – that they could.  An objective attempt to size, segment, and forecast the commercial UAS market (all of which the report appears to be), is something it never actually was, and we believe it’s critical that all participants in the UAS industry know this and avoid making decisions based upon it.

Methodology – Boring But Oh So Important

A biased agenda is only one part of the story regarding the reliability of AUVSI’s findings.  An equally important part is the quality and reliability of the research methods.  Generally speaking, strong research methods yield highly defensible results.  While presented somewhat differently in the report, the methodology used by the researchers can be summed up as:

Studying UAS adoption in Japan Adjusting the Japanese experience for the US market Asking experts how big they think the market is / will be Applying research on new technology adoption to the US UAS market

As experienced researchers, it sounded pretty good to us at first.  But, unfortunately, it did not hold up very well to careful scrutiny.

Japan – When the Best Available Proxy Just Isn’t

We like the idea of searching for analogous markets and scenarios that can serve as the basis for forecasting the US market.  The question is: Is Japan an analogous market for the US? We believe that the US and Japan are so different, and the magnitude of the required extrapolations so enormous, that the resulting data is not useful.  Most in the industry already know that Japan’s UAS market remains dominated by one product, the Yamaha RMAX (77% market share in Japan), which is used to spray a large percentage of the country’s rice fields.  These fields tend to be small (less than five acres), are often in densely populated areas, and are located on steep hard-to-reach hillsides.  In contrast, rice represents a tiny percentage of US agricultural output.  Our farms are comparatively huge (very often running well into the thousands of acres).  No single product, much less a relatively large, unmanned helicopter from Yamaha is likely to dominate the American market.  And remote sensing, not pesticide application, is almost certain to be the dominant use of UAS for the major US crops of corn, wheat, and soy.

While we understand that Japan has been the most aggressive adopter of commercial UAS technology as a result of its rice industry, and we appreciate the resulting temptation to use Japan as a proxy for the United States, we see such a large disparity between the agricultural economies of the two countries that we find it impossible to draw any parallels that inform how the UAS market in the US will evolve.  And while no other country serves as a better proxy than Japan, the absence of a better alternative cannot justify the use of a bad one.

Expert Opinions or Really Just Guesses?

Another method used by the researchers is referred to as “survey results.”  In short, the researchers conducted 30 telephone interviews with industry experts and asked many questions, including those regarding two critical matters: the size of the commercial UAS market, and the relative size of key market segments.  The responses were then used to develop “reasonable estimates.”  On the surface, the approach of asking experts for their opinions seems sensible whenever you’re conducting research.  However, many of the experts that were consulted were hand-picked by AUVSI, which immediately introduces the possibility (likelihood?) of bias given its agenda.

Perhaps more important, not every question is one that experts can necessarily answer well.  Certainly UAS industry experts would generally be well prepared to share their opinion on whether fixed wing or rotor aircraft will be more useful for particular applications, or what regulations make the most sense for the small UAS market.  But the idea that you can ask experts for opinions about the size of a market and obtain meaningful results is, we believe, inherently flawed.  Unless these experts were professionals focused on sizing, segmenting, and forecasting the commercial UAS market (and nothing close to 30 such professionals exist), the opinions voiced by the “experts” are nothing more than guesses, akin to asking 30 people how many clouds there are in the sky and expecting to get the right answer.  Our experience in sizing markets, and in working with many experts across a wide variety of markets over many years, gives us considerable confidence in stating that very few people have good insights into how big a market is today, much less how big it will be years from now, even if they work directly in it.  The lack of insight is only compounded for complex, nascent markets like the one for commercial UAS.

A Brief Literature Search Isn’t Really a Research Method

The final method used by the researchers was a “brief search” of “literature…on rates of adoption of new technologies.”  The authors explicitly state that they could have gone deeper in investigating how this research might apply to UASs, and that a follow-up study on this subject is recommended.  That they simultaneously cite the use of the literature as one of their four methodologies, yet characterize their search of the literature as “brief” and recommend a follow-up study raises serious questions.  From our perspective, the brief use of literature on technology adoption trends is far from a true research method. It’s more akin to subject matter expertise and qualitative insight that professional researchers might use to inform or validate a forecast they developed with rigorous quantitative techniques.  How it was actually used and what value it added to the research is unclear, other than allowing the authors to make the statement that because UAS are already being used “….we reject the notion that these products will not be adopted,” a statement that even a layperson with little or no knowledge of UAS could likely have made.

In sum, we see a methodology that erroneously uses Japan as an analog; uses experts for answers that are really just guesses; and relies upon a loose, limited, and ambiguous application of prior research on new technology adoption to validate the statement that UAS will, in fact, be used in America.  As much as we want to support AUVSI, the authors, their methodology, and the research results, we simply cannot.

Sometimes You Get Lucky

As a final point, we do need to acknowledge (and quickly refute) the possibility that despite the flawed methodology, the research findings are reasonable, by pure chance.  Perhaps, as the authors assert, the US commercial UAS market actually will be at least $1.15 billion in the first year after rules are approved.  And perhaps 80% of this, or roughly $900 million will be driven by the precision agriculture market.  But at the risk of disappointing the reader, and with a view toward keeping this post a reasonable length, suffice it to say that while we have high expectations for the US commercial drone market, we do not see a billion dollar market in year one.

We base our position on the deep understanding we have developed of the precision agriculture market, which is at the heart of AUVSI’s forecast.  Indeed, the many in-depth interviews we’ve conducted with farmers, precision agriculture vendors, crop scientists, crop scouts, agriculture equipment dealers, input vendors, academic researchers, manned aircraft operators, satellite imaging providers, UAS-service providers, and many others indicate a building interest in the use of remote sensing in general, and in UASs in particular, but do not support the notion that a mad-dash by farmers and their consultants to use UASs is underway or right around the bend.  And after looking at many other vertical and application markets for UAS, we do not see any – not public safety, inspection, photography, mapping or a variety of other possibilities – that can close the resulting multi-hundred million dollar gap in the AUVSI forecast created by the much slower adoption we see in precision agriculture.

Acknowledging the Effort

Of course, it’s easy to critique the work of others, and hard to do the work yourself.  In defense of the report’s authors, we need to acknowledge that they did a lot with a little.  They had a budget to work within that was much smaller than is typical for an assignment of this complexity, and they invested much more time and effort than the budget allowed.  Like virtually almost everyone else in the brand-new (some would say still non-existent) commercial UAS industry, they had limited prior exposure to the commercial UAS market, making their learning curve steep.  And they had complex agendas to meet in order to satisfy their client, AUVSI, and its many stakeholders.  In light of the foregoing, there is much for which they should be commended.  But creating a forecast for the commercial UAS industry that participants can rely upon for critical decisions is not one their accomplishments.  Indeed, it’s not what they set out to do in the first place, so they can’t really be faulted for not accomplishing it.

Looking Forward

As we look to the future of the commercial UAS market in America, we believe the need for reliable data and insights is more acute than ever.  Critical decisions about products, markets, channels, and operational best practices are being made daily, even as we write. UAS technology vendors, service providers, and end-users are relying on intuition, gut feel, or data that is very likely misleading.  Some decisions will still turn out to be right, but many others will unnecessarily result in big missed opportunities, significant wasted time and resources, disappointed customers, angry investors, disgruntled employees, and many other negative outcomes that certainly could have been avoided.

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[1] AUVSI’s forecast implies a UAS market that is likely significantly greater than the $1.14 billion in 2015 shown in the report, because it does not address the large part of the market that is currently being satisfied by offshore vendors.  The $1.14 billion represents only product supplied by US manufacturers of UAS.  It may also fail to include industry profits, though further investigation would be required to confirm this.

The post Five Reasons the AUVSI Got Its Drone Market Forecast Wrong appeared first on Drone Analyst.

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Film or Farm: Which is the Bigger Drone Market? – Part 2

This is Part 2 in a two-part series that summarizes my views on why video/film/cinema – not agriculture and farming — will be the largest driver of sUAS commercial businesses. In Part 1, I explore thoughts on the market for video/film/cinema, and below I outline why I believe agriculture will lag in market uptake.

The March 2013 market study produced by the Association of Unmanned Vehicle Systems International (AUVSI) titled “The Economic Impact of Unmanned Aircraft Systems Integration in the United States,” says 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.”

I don’t buy it, and here’s why:

Let’s start with the AUVSI forecast.  Read what one commenter said in my last post:

“There is a basic problem with the AUVSI study methodology – it took the total arable land area of Japan and divided it by the number of registered UAS performing agricultural roles in that country to provide a demand factor. It then divided the total amount of arable land in the United States by that same demand factor and used this to forecast its prospective future demand for the agricultural sector as a whole. The problem is, the Japanese agricultural land areas do not correlate in size, capacity, or type of agriculture as performed in the United States. In fact the Japanese usage is largely restricted to spraying of rice paddies on small allotments as a replacement for labor which has shifted to the cities. The only possible comparison that the Japanese land area to UAS numbers ratio that could have potential validity is to compare the Japanese ratio with the total amount of land used in rice cultivation in the United States. That is a very different equation than that used by the AUVSI study and can be predicted to give a very different set of economic figures as a result. AUVSI has used very bad modelling to build its argument on, and its figures should be used very, very, very cautiously.”

He’s right.  So how do we get a proper forecast?  That will take some time to work out and look for material from me on that later. For now let’s look how modern agriculture has historically adopted and used technology, because the devil’s in the detail.

The farmer and the satellite

With the launch of the Landsat 1 satellite in 1972, NASA funded a number of investigations, including one that  examined the spring vegetation green-up and subsequent summer and fall dry-down throughout the Great Plains region of the Central U.S. The researchers for this study found a way to quantify the biophysical characteristics of vegetation from the satellite images.  They were able to calculate the ratio of the difference between the red and infrared radiation being reflected back by plants on the ground as a means to determine the vigor of plant life. This led to a metric known as the Normalized Difference Vegetation Index, or NDVI.

NDVI attempts to simply and quickly identify vegetated areas and their condition, and it remains the most well-known and used index to detect the health of live green plants today.  Since early satellites acquired data in visible and near-infrared, it was natural to sell it packed up in maps to farmers.

NDVI allows agronomists and producers to identify problem areas and make timely decisions. Scouting maps can be requested at key dates as guidance for field visits. NDVI-based scout maps show variations in the field, so users know where to look in the field to determine where corrective or preventative measures are needed. Users can plan their field visit locations, take it to their GPS or a printable pdf report, and accurately evaluate the reasons for in-field variability.

Monitoring fields

NDVI maps are also used for monitoring fields, detecting anomalies, and for estimating crop yields. A strong correlation has been demonstrated between yields and NDVI at certain crop growth stages, as described in this research.  Besides satellite-generated images, farmers also have access to more resolute imagery taken from manned aircraft.  They can subscribe to a service like Terravion and GeoVantage to get NDVI maps every week if they like. The greater the frequency, the lower the cost per acre.

Here’s the rub: use of aerial imagery all sounds great until you start to look at the numbers. According to this report, only 21% of service providers (referred to as dealers in the report) who offer aerial imagery say it’s profitable, and it remains less profitable than other precision application services.

To spray or not to spray?

Here’s more interesting detail from examining how farmers are using technology today. Farmers know that plant growth regulators, insecticides, herbicides, fungicides, and mid-season fertilizers applied to selective locations can be effectively used to maximize farm output. Since NDVI maps from satellites or manned aircraft show variation of biomass within a field, farmers can divide those differences into management zones and address crop issues with variable rate spray applications (i.e. use more of this nutrient here, less of that pesticide there).  The idea is to minimize costs while increasing yields by using as little as possible of expensive inputs, applying them precisely where and when they are needed.

But here’s some breaking news. The vast majority of farmers do not use variable rate prescriptions, and the trend is currently in the wrong direction. This well-regarded survey says variable rate pesticide application usage decreased from 22% of all farmers in 2011 to 16% in 2013. And it seems there is low adoption of aerial imaging when it comes to providing guidance for targeted nitrogen application as well. Nitrogen fertilizers, which are expensive, are one way farmers are able to achieve the high yields we see today with modern agriculture. But a recent poll of Iowa farmers’ nitrogen management practices show only 25% of corn and soy farmers use aerial imagery to reduce nitrogen application.

The key takeaway is this: farmers already have data-driven tools available to them to make better crop management decisions, and the vast majority are not using them.

The farmer and the drone

Today, farmers have access to low-cost drones with cameras and image sensors on board.  These can be purchased for a few thousand dollars and flown by the farmer himself, or if they are lucky – and regulations aside – a local service provider.  Basically, the drones can produce the same NDVI images and maps that specialized satellite or manned aircraft image specialist do – only now with much higher resolution images.

You would think farmers would be thrilled with the combination of higher resolution images and more precise GPS coordinates, since it lets them identify problem areas within a few feet of accuracy.  In some cases, that is true, and others it is not. A higher resolution means you see more detail – detail that actually may detract from the usefulness of the image, like when it shows a shadow.  Is that a shadow or a bad crop area?  Hard to tell from the picture.  For that, you need to see it with your own eyes, as is done with crop scouting.

Crop scouting – the act of inspecting crops to look for problems such as pests, weeds, irrigation issues, and so forth — is generally done today via a simple drive-by in a pickup or an ATV.  Scouting is not a perfect science, and neither farmer nor service provider can assess every plant’s health and crop pressures. However, small drones are portable, and users can fly them over a field and see real-time images on a monitor. Since many farmers go out and scout their crops every couple of weeks manually, a drone crisscrossing the air could perform that work much more effectively. This helps cut down on the time identifying areas that need detail scouting and helps give the proper inputs on where to eventually spray weed control or pesticide, or even determine when it is time to harvest.

Beyond clarity of regulations, what’s missing for widespread adoption?

With the total value of our nation’s crop estimated at $140 billion per year, even a modest improvement in yield would have a substantial aggregate economic impact. However, 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.

What seems to be missing from today’s solution is the expertise to interpret the data, correlate it with what is actually happening on the ground, and recommend a course of action.  Services that deliver aerial imaging can provide the data, but someone needs to invest the time, money, skills and software to get actionable insight from it. Right now, it appears that’s not being done well by the dealers who already offer imaging from satellites and manned aircraft. How’s that going to change when they start offering imagery from drones?

Here are few more questions:

What’s the incentive for a farmer to adopt a new imaging technology when 75% of farmers (at least in Iowa) don’t use what’s available to them now and dealers countrywide say it’s not profitable? How will drones change that equation?  Why will farmers or crop consultants invest the money, time and expertise analyzing UAS-derived datasets if they aren’t doing the same with the manned aircraft or satellite derived data they can already purchase? How will UAS service providers convince farmers that their data is more valuable, more actionable, and has a high ROI when so many farmers seem to be relatively uninterested in data in the first place? Are farmers prepared to adjust their field operations and personnel to be data driven, and how will they make this happen?

I’m not saying that farmers won’t use UASs to improve their operations.  Some absolutely will, and in fact, some already are.  But given all of the underlying complexity, it does beg the question: Is agriculture really the biggest UAV market, “dwarfing all others” as AUVSI asserts?

My answer: I don’t think so.  To date, I’ve seen no research that really digs into the critical questions underlying the use of UAS in agriculture and shows the rationale supporting massive, rapid adoption; this despite the massive bets – in terms of time and capital investment – that are already being placed.  With so much at stake, I’m thinking that should be the subject of a considerable research study, one that I am currently formulating.  Stay tuned for details. Until then, my bet is that film – not agriculture — is the biggest sUAS market.

What do you think? I’m interested in your comments, reactions, and responses.

The post Film or Farm: Which is the Bigger Drone Market? – Part 2 appeared first on Drone Analyst.

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Film or Farm: Which is the Bigger Drone Market? – Part 1

This is Part 1 in a two-part series that summarizes my views on why video/film/cinema – not agriculture and farming — will be the largest driver of sUAS commercial businesses. In this part I explore thoughts on the market for video/film/cinema, and below I outline why I believe film and video will lead in market uptake. In Part 2 I’ll outline why I believe agriculture will lag in market uptake.

A total economic impact of $13.6 billion and 70,000 new jobs in the first three years. That’s the forecast for what drones will bring to the U.S. once regulations are in place, according to a March 2013 market study produced by the Association of Unmanned Vehicle Systems International (AUVSI). The report entitled “The Economic Impact of Unmanned Aircraft Systems Integration in the United States,” goes on to say that precision agriculture and public safety will make up more than 90% of this growth. Most important, the report confidently states, “…the commercial agriculture market is by far the largest segment, dwarfing all others.”

These figures get repeated over and over again in the media and across the blogosphere.  Existing players and potential new entrants in the UAV market are betting their business futures – and in some cases their entire family’s income and savings – on them.  Everybody wants in on the action.  But are the media, blogosphere, and AUVSI reports correct? I have some serious doubt. Here’s why:  The numbers from my recent study on the impact of Federal Aviation Administration (FAA) rules on the small UAS business say aerial photography and cinema – not agriculture –dominate the other vertical markets and will continue to do so for some time. This two-part post looks at those two industries – film making and agriculture – and attempts to separate market forecast hype from the reality by looking at detailed numbers, market forces, and the specific applications themselves.

“Survey says…”

Validated respondents to my survey represent principals and employees at sUAS companies whose annual revenues span from US$100,000 to more than US$10 million. Every significant market vertical is represented. Survey participants were required to identify their primary commercial service offering. The results appear in the table below.

Primary Service or Product Response Percent Aerial Photography / Video & Cinematography / Movie /TV 41% Sales of sUAS aircraft and/or technology 11% Agriculture / Farming Services 8% Mapping / Topography / Geospacial / Photogrammetry 5% Education and Training 5% Consulting 4% Data Aggregation or Analytic Services 3% First Responder Service (Police, Fire, or Medical) 3% Utilities 2% Scientific Research 2% Construction 2% All Others 13%

Clearly, the dominant service offering is aerial photography / video / cinematography / movie/ TV (41%). Only eight percent of participants identified themselves as offering or wanting to offer agriculture / farming services.

When viewed through the lens of each service provider type, this data offers some interesting insights. For example, the largest group of service providers, aerial photography and cinematography, have current revenues that spread across the whole range (from zero to over $1 million). In fact, several reported revenue over $10 million, a figure no other group – including agriculture – reported. Clearly current UAS market activity runs contrary to the AUVSI forecast.

Money talks

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.  According to this report, the MPAA has been constantly appealing to the FAA to let them use smaller drones for film-making purposes. If you follow the market dynamics and technical advancements of the TV and film industry, the push by the MPAA for sUAS makes sense. High-end digital cameras and computer-generated imagery (CGI) effects have drastically reduced film-making costs, and have been delivering scenes that weren’t possible before. Even so, the industry is striving for more technological enhancements every day because audiences expect to see something new and spectacular in each new film. The longstanding arms race in Hollywood among studios vying to deliver the most eye-popping shots and special effects continues unabated.

Drone cinematography is now the new kid on the Hollywood block. A drone costing just a few thousand dollars can deliver high wow-factor shots that were impossible to get before, or could only be captured using expensive cranes, stabilizing equipment, and a manned helicopter. The average TV or movie audience member generally doesn’t realize how much of a production is actually shot by a drone, but the astute viewer can already see drone footage being used everywhere in popular TV shows and movies (sorry FAA).  A growing share of Hollywood blockbusters and TV programming involve UAS footage – Oblivion, Man Of Steel, The Hunger Games, The Dark Knight Rises – to name a few. Perhaps the most famous is this scene from the James Bond movie Skyfall:

Drone cinematography is still in its embryonic stage. Multirotor drones that hold cinematography-grade cameras have only a range of up to a mile, and their battery only lasts about 10 to 15 minutes. Still, they give filmmakers a definitive edge over traditional methods. Drones allow directors to pull off mind-boggling, acrobatic camera stunts that would otherwise have been possible only through CGI or maybe not at all. This incredible sense of power and cost savings are the reasons many filmmakers continue to lobby for the commercial use of drones and one of the reason why my research finds this market the largest.  Case in point. The FAA just announced on June 2nd that seven aerial photo and video production companies (not any farming or precision agriculture companies) have requested regulatory exemptions under Section 333 of the FAA Modernization and Reform Act of 2012, which would approve commercial drone operations for TV and motion picture work. This is the first industry to do so on such a scale.  While beyond the scope of this post, the photojournalism industry is another major force lobbying for drone usage, based on similar logic; getting the shot that keeps the audience riveted to the screen while ridding themselves of the enormous cost of operating manned helicopters.

Photography & Video – Film’s nearest cousins

When you look at the ‘film’ market for drones, there is no clear way to delineate film from video from photography.  Aerial photography and video platforms are mostly the same and vary mainly in size, camera-carrying capacity, and technical capabilities that result in each platform being best suited for a certain grade of user (ranging from hobbyist to professional videographer). As I have written in The Democratization of Aerial Photography, technical and financial barriers to entry into the aerial photography, video and film services market are low, so it makes sense there are more players now and there will be more in the future. If a lightweight US$400 GoPro camera can shoot cinematography grade 4K video, and you only need US$1200 to get it up in the air with a small drone, and you can charge a US$1000-$2000 day rate for its use, and audiences are enamored of the resulting images, then it’s no wonder this market is exploding. Besides film and TV, here are some other aerial photography and video-related 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 SPORTS – player and team position analysis

That’s my argument for why I believe aerial cinematography / videography / photography will dominate the early sUAS business market.  To put a bow around it all:

Studios and audience are enamored of the footage / images that can be captured by drones, so there is clear demand for the final product that drones can create. The financial and technical barriers to entry are low for many applications, making it easy for businesses to begin offering sUAS-based film and photography services. Where the technical and financial barriers are higher (for example, studio quality film production) a technically astute and well capitalized film production industry is eager to get their hands on new technology like drones. A lot of filming occurs in a tightly controlled environment on private property, where safety can be ensured and where a compelling case can be made for regulatory exemptions.

In Part 2 of this post, I’ll make my case for why I don’t think farming and agriculture is largest market. Later I’ll be releasing some research in conjunction with Aironovo Advisors on the economics of UAS in agriculture. As always, I’m interested to hear what you think—share your thoughts in the comments below or contact me colin@droneanalyst.com.

Image credit: Shutterstock

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Which is Better: Open Source or Proprietary Drone Software?

Just like Google vs. Apple

When the Apple iPad first appeared on the market in 2010, I didn’t jump in to buy one. I didn’t own an iPhone, I had a company-issued Blackberry, so I wasn’t motivated. Besides, I figured there would be a better model a year or so later. So I waited. By the time Apple released the iPad 2 in 2011 all my friends had one. It looked and felt great in the hand. I thought the user interface (UI) was pretty slick. But I also heard about this thing called Android in development by Google and the Open Handset Alliance (OHA) with a similar and perhaps better UI. I was conflicted about which to buy first. I eventually got an Android tablet on the promise of what could be an open source model. However, after one disappointing experience after another, I got rid of it and switched a year later to an iPad first generation. I stayed on that path and haven’t looked back since.

As Diffen says:

Google’s Android and Apple’s iOS are operating systems that provide a good example of open source vs. proprietary. Both are used primarily in mobile technology, such as smartphones and tablets. Android, which is Linux-based and partly open source, is more PC-like than iOS, in that its interface and basic features are generally more customizable from top to bottom. However, iOS’ uniform design elements are sometimes seen as being more user-friendly.

But wait, I thought we were going to discuss drone software. We are.

For all drones, the interaction between the user and the aircraft, and the aircraft and its hardware is mediated by software. As I have written here, the quality of the pilot experience can be driven by the features and the quality of implementation, but the comparison with tablet and smartphones is a good one. Just as with your smartphone and tablet systems, choosing the wrong software platform for your drone can produce some very high switching costs should you decide later you need to change. In this post, I’m going to look beyond manufacturers’ claims and help you understand the differences with the following explanations of what is it, who makes it, who uses it, and what you need to know.

Open Source Drone Software – the Google Android model

What is it?
The term open source refers to software whose source code — the medium in which programmers create and modify software — is freely available on the Internet. By contrast, the source code for proprietary commercial software is usually a closely guarded secret. The most well-known example of open source software is the Linux operating system, but there are open source software products available for every conceivable purpose.

Open source software is distributed under a variety of licensing terms, but almost anyone can modify the software to add capabilities not envisaged by its originators. Most often the software originator or distributor declare a group off standards or technology specifications and make them widely available, allowing many companies to create products that will work interchangeably and be compatible with each other. One such standard is an Application Programming Interface (API). An API is a feature of a software application that allows other software to interoperate with it, automatically invoking its functionality and exchanging data with it.

Who makes it?
The best example of an open source software product for drones is 3DRobotics’ ArduPilot Mega or ‘APM.’ APM is the leading open source auto-piloting software. It’s billed as the first universal autopilot, which means it enables same hardware to provide fully autonomous control to a multitude of vehicles, from multicopters and traditional helicopters to fixed-wing planes and even ground rovers. APM is a full UAV autopilot, which means it supports both piloted and unpiloted (fully autonomous) flight, including hundreds of GPS waypoints, camera control, and auto-takeoff and landing.

At a recent small unmanned systems business expo in San Francisco, Chris Anderson said his company 3DRobotics and its ecosystem of partners are in the process of “Building the Android of UAVs.” He compared the APM firmware, software, and its partners with the Android operating system open source software stack. You can watch that presentation here beginning at 3:51:40.

Parrot, maker of the AR. Drone, Bebop and parent of Sensefly is another open source vendor. Theirs is an open API platform with shared source code released under the terms of the AR.Drone License. You can read about their software development kit (SDK) here.

Who uses it?
Thousands of hobbyists and researchers, but very few commercial drone operators – at least not yet.

What do you need to know?
Pros - The common theme of “openness” in the above definitions is the ability of diverse parties to create technology that interoperates. When evaluating your drone business’ current and anticipated software needs, a software solution’s capability to interoperate is an important criterion. To extend the value of your physical aircraft investment, you may want to select a software solution that is based on open standards and APIs that facilitate interoperability and has the capability for direct integration between various vendors’ products.

APM offers this, plus some great features like point-and-click programming/configuration, multiple command modes, failsafe programming options in the event of lost control signal or low battery conditions, camera gimbal control and stabilization, some limited real-time telemetry and data logging, and of course, APIs to third-party software and hardware.

Cons - Like the early versions of Android, the APM interface and basic features are generally more customizable. That means ‘partial assembly required’ for commercial use. In other words, you’ll need to tap a community of engineers to determine the compatible components and integration possibilities if you want extended capabilities like the support of large heavy-lift multirotors. Granted, 3DRobotics has made progress with the release of its IRIS quadcopter, which contains the Pixhawk open source hardware unit. While Pixhawk with its 32-bit architecture, faster processor, more memory, etc., is shaping up to be the successor to earlier APM-supported hardware, it’s still not quite ready for multi-duty aircraft where you need to hot swop configurable sensors. Other companies will need to aggregate more reliable components on top of Pixhawk or wait for the next generation of APM to accomplish that.

Proprietary Drone Software – the Apple iOS Model

What is it?
Proprietary software, or closed-source software, is drone software licensed under exclusive legal right of the copyright holder with the intent that the licensee is given the right to use the software only under certain conditions, and restricted from other uses, such as modification, sharing, studying, redistribution, or reverse engineering. Usually the source code of proprietary software is not made available.

Vendors typically distribute proprietary software in compiled form, usually the machine language understood by the drone’s central processing unit. They typically retain the source code, or human-readable version of the software, written in a higher-level programming language. By withholding source code, the software producer prevents the user from changing how it works. This practice is denounced by some critics, who argue that users should be able to study and change the software they use, for example, to modify unwanted features, or fix malfunctioning vulnerabilities.

Who makes it?
Just about everybody other than 3DRobotics and AR.Drone. Examples of commercial-grade software embedded in small drones include: PrecisionHawk, Draganfly, and Aeryon, to name a few.

Who uses it?
Thousands of civil and public small UAS operators and a few hobbyists worldwide.

What do you need to know?
Pros – The fact is, proprietary source is better than open source in certain situations — like when you want a turnkey hardware / software solution to support a commercial sUAS service such as mapping, agriculture, or industrial inspection. Just know that you will pay more and be limited to the improvement roadmap of a single vendor.

Some of the other benefits are less apparent.

Tech support. First, you’ll never have to fix inherent problems when something goes wrong. With any software, things occasionally go wrong. When this happens with open source software, you, or an engineer who owes you a favor, may need to spend time debugging the problem. This entails reading through code, working with an open source community, or your open source support provider, and applying a fix. With closed source, on the other hand, once you determine that the problem lies in your vendor’s code, you’re all done! All you have to do is file a ticket and wait. It can take some time to decide whether you want Service Level Agreement (SLA) support with guaranteed response times, or if you feel comfortable posting issues on forums or doing your own support. With closed source, you pretty much never have to worry about where you’re going to get support. Sure, you might not ever get to speak to an actual engineer, but at least you always know who to call. Sure, you may have to wait for the next software release version for the fix, and sometimes it never comes at all, but there’s nothing you can do about that. Just kick back, relax, and hope for the best.

Fewer options. Yes, sometimes fewer options is a benefit. With closed source, you don’t have to contend with so many options. You only have to explore two or three large vendors in each market. You can save time. Open source offers lots of solutions when considering a motor, electronic speed controller, camera trigger, telemetry downlinks, etc. In practically every category, you can find robust offerings built by a variety of vendors with different architectural approaches. It’s also very common to find similar tools that are optimized for different use cases (e.g., performance versus scalability versus simplicity). To make sure a tool will work best for your particular use case, download it and give it a try.

Cons – In some instances proprietary isn’t the best option. For example, you may want to take advantage of the growing use of the air vehicle communication protocol standard MAVLink. MAVLink has been extensively tested on the open source platforms and serves there as communication backbone for the MCU/IMU communication as well as for Linux interprocess and ground link communication. This protocol has enable companies like DroneDeploy to create a very user-friendly web-based mission planner which allows control of multiple drones. I suspect this protocol will become the de-facto standard in the growing ‘mission planner’ functionality race and proprietary protocols will leave their solutions inadequate.

So, there you have it. A few good reasons why you want to consider closely whether you want your business to use open source or proprietary drone software. Do you have others you’d like to share? Please comment below. If you have questions and would like to discuss further, email me at colin@droneanalyst.com. Cheers.

Image Credit: Shuttestock

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Will Future FAA Rules Kill The Small Drones Market?

I just released the findings of my two-month survey studying the impact of FAA rules on small unmanned aerial systems (sUAS) in the U.S. You can read the press release here.

Among the many insights I got from the research, these two are the most significant: Unfavorable rules will disintegrate an already fragile market for sUAS in the U.S. Significant market growth awaits once FAA regulations allow.

“Impact of FAA Rules on sUAS Business” examines the economic impact of current FAA policies for sUAS operating in Class G uncontrolled airspace. It evaluates how commercial service providers and operators perceive those rules and assess their importance.

Since 2007, the FAA has attempted to prohibit commercial use of sUAS in the U.S. through a series of statements and policies aimed at controlling activity until actual regulations are put in place. The Federal Aviation Administration Modernization and Reform Act of 2012 authorizes the FAA to issue licenses for commercial drone use in the U.S. The FAA modernization law was widely expected to result in tens of thousands of commercial drones being licensed to fly over U.S. airspace. So far, however, it has produced only uncertainty: a combined 71% of participants in the survey say current rules are unclear and indicated confusion around conditions under which it is currently legal to operate sUAS for commercial purposes in the U.S. In fact, when offered 12 possibilities for conditions conducive to legal sUAS operation, the third most-checked condition was “the FAA does not regulate Class G air space.”

This research investigates the potential economic impact of both favorable and unfavorable future regulations, including revenue growth forecasts and hiring plans. Participants clearly identified five types of FAA regulations that would be unfavorable for their businesses, with 61% indicating they would simply not start or shutter their existing business operations if those unfavorable FAA regulations were in place.

In light of those findings, I conclude the overall market for sUAS in the U.S. would disintegrate if unfavorable regulations come into being. All the positive economic impacts like revenue, job creation, and tax base creation—not to mention the practical benefits of U.S.-based drone business services—would not be realized.

To get a copy of the research visit this page: http://droneanalyst.com/research/purchase/.

And, if you have questions and would like to discuss one-on-one, email me at colin@droneanalyst.com

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