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Drone Delivery: How much would you pay?

I love the look of the Tesla Model S, but I’d never get one. Somehow, the opportunity to pay $100K to drive only 300 miles before spending 4 to 9 hours recharging does not appeal to me. I also love the idea of Amazon’s drone delivery initiative Prime Air.  But, like the Tesla, the opportunity to pay a lot of money for drone delivery of the latest camera just doesn’t make sense.

Amazon has successfully painted a picture of a future in which its drones push merchandise from its warehouses to nearby consumers in 30 minutes. But to qualify for Prime Air, the order must be less than five pounds, which, according to Bezos, includes 86% of the packages Amazon currently sells. The order must also be small enough to fit in the cargo box that the craft will carry, and the delivery location must be within a 10-mile radius of a participating Amazon order fulfillment center.

What is less than 5 lbs.?  Here’s some examples from some recent online shopping trends research:

Consumer electronics Books Clothing

Sure I get that instant gratification is clearly one element why people might use Prime Air and providing outstanding service is another; as is staying ahead of the curve with innovative delivery and order fulfillment. All highly significant points in their own right to meet Amazon’s goal: “to be Earth’s most customer-centric company.” But as this article says cost of transportation is another. In 2013 Amazon’s incurred overall losses of $3.5 billion related to shipping costs. How long can that go on?

The problem is that I think drone delivery is going to cost a lot – maybe not at first but eventually. If Amazon can charge $99 per year for Amazon Prime, which provides delivery within 48 hours of placing the order, how much can it (or others) charge for nearly instantaneous delivery via drone? How much would you pay?  Would $500 per year be out of line?  How about $1,000?  What about an extra $100 (30% markup) to get your new GoPro delivered before you leave for the airport in an hour?

I’m curious what you would pay. So I’m running 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?

To take the poll click this link: https://www.surveymonkey.com/s/drone-delivery

I’ll run this poll for a few weeks.  Check back here later and I’ll post the results.

As always, I’m interested in hearing from you.  If have something to say feel free to comment below or email me at colin@droneanalyst.com.

Image credit: Amazon

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Drone Tech Winners and Losers at the Precision Aerial Ag Conference 2014

Last week my colleague Mitch Solomon and I were privileged to be in the company of more than one thousand farmers in rural Decatur, IL, for the two-day Precision Aerial Agriculture Show 2014 (PAAS 2014).  Mitch covers five key takeaways from the show in his post about the event – including the most salient one: There is no killer drone app for farmers – rather, drones are a tool with many apps and high ROI.  In this post, I’ll give an accounting and analysis of the players in attendance that are supporting the market for drones in agriculture. Some were present, others were mentioned but weren’t present, and still others were surprisingly absent on all counts.

Bottom line

Regardless of which vendors attended or exhibited, here’s what you need to know with regard to the drones vendors serving or intending to serve the agriculture market:

Most of the companies that serve this market are small businesses. It is clear they are working hard to learn firsthand what farmers want from small drones and in doing so are establishing networks of distributors and service providers that will lock other players out of the market. Manufacturers of small drones for precision agriculture are consolidating around DJI and 3DRobotics for their flight control and mission planning software – mainly because of functional maturity and low-cost. The large aerospace companies and Department of Defense (DoD) contract vendors do not have a presence in this market. Even though some have participated in agricultural academic studies, as a whole their products are unknown in the farming community. These vendors simply have not established the necessary relationships with growers, dealers, coops, agronomists, and local service providers.  As a result, it’s probably too late for them to capture any significant U.S. agriculture market share.

Present and Accounted For

AgEagle – AgEagle had the enviable booth position just inside the show floor, which made it hard to ignore. Its purpose-built Ritewing Zephyr II fixed-wing flyer with uTHERE flight controller and Canon S100 camera goes for about US $12,500.  The system comes with a catapult to get it in the air fast, where it will fly at 40 mph and cover approximately 600 acres in 30 minutes. A cloud-based aerial agronomic imagery solution is offered in partnership with MyAgCentral, a division of DN2K. This solution has a fully integrated workflow function that streamlines the process of flying fields and capturing, storing, processing, viewing, and sharing aerial images. For instance, ‘shape files’ can be imported into SMSTM Software for use with variable rate applicators. Information on that partnership can be found here.

Agribotix – Agribotix gets that what is most important in the drone market is data services — not the aircraft. The company deploys a proprietary software solution to deliver geo-referenced aerial images immediately after a flight and high-resolution color and NDVI maps within hours of collection. These images are hosted on Agribotix’s servers for access from multiple devices, including mobile devices so that growers can take them into the field while scouting.  Notwithstanding, they do offer the Hornet, which is a simple fixed-wing UAS suitable for agricultural applications.  The unique thing here is that you can rent it on a seasonal lease. It uses open-source hardware and software to keep costs low.

Crop Copter / Chief Agronomics – Matt Barnard, a farmer and founder of this drone vendor, understands what growers wants because he listens.  Crop Copter offers TBS Discover and his own more durable quad and hexacopter through Van Horn Precision Technologies. They provide the imaging services and support – and even repair – the flyer.  All units are complete and ready-to-fly.

Farm Intelligence / FourthWing / WingScan – These Minnesota-based affiliates work in tandem to provide a complete hardware and software solution for precision agriculture. WingScan is the image data and decision support software platform. Fourth Wing is the designer and manufacturer of a small unmanned aircraft system they call Vireo.  Vireo comes equipped with a dual-band sensor that is capable of capturing near infrared (NIR) and visual (RGB) data in a single pass. Farm Intelligence sells the device via its FI2 Sales and Leasing.

Field of View LLC – Field of View engineers and sells remote sensing devices for drones that service the agricultural and mapping industries. Their GeoSnap VN-TC is an add-on for the commonly used multispectral cameras.  It generates a log of image-associated position and attitude data and manages image capture by triggering the camera based on GPS coordinates.  Image log file can be imported into packages like Agisoft to get complete geo-referenced image maps.  Look for Field of View products to operate with the open-source MAVLink Micro Air Vehicle Communication Protocol soon.

Horizon Precision Systems – This company’s booth was packed – almost the entire show – and the reason is simple: Horizon offers low-cost entry-level systems. Based in Champaign, Illinois, the company is an offshoot of Horizon Hobby, LLC, which has distribution facilities in the United States, Europe, and China. It has decades of experience developing, distributing, and servicing all types of radio control products. So it is no wonder they created this agriculture-focused subsidiary.

Hoverfly – Hoverfly demonstrated its tethered UAS called “LiveSky.”  Tethered UAS, in this case a quadcopter, can stay aloft for much longer than those reliant on a battery alone since power is transmitted from a ground source to the copter via a long tether. This system is interesting because the LiveSky would maintain its position above the control device, allowing you to theoretically place it in a truck bed and drive around with it hovering above the truck. You can view a one-minute video of their demo on YouTube here.

MLB Company – During the show, founder Stephen Morris showcased his company’s $150,000 Super Bat UAV. It’s a high-end drone model that can fly thousands of feet in the air and survey up to 55,000 acres in a single day. When it took to the skies for a demo, all heads turned because it was the only gas-engine-powered drone at the show.  All others were electric, and their motors could barely be heard above the sound of wind, but of course they can’t fly nearly as long.

Pix4D – Pix4D is a software package used to convert the hundreds of aerial images that are taken by drones on survey flights into geo-referenced 2D mosaics and 3D surface models and point clouds similar to Autodesk ReCap 360. Their software is bundled by many UAS vendors – including SenseFly, which while on site, handed over the pictures from their demonstration flight earlier in the day.  This gave Pix4D the opportunity to show a 3D surface model of a demonstration field.  Pretty cool.

PrecisionHawk – PrecisionHawk’s fixed-wing Lancaster platform is impressive. Its lightweight design allows for swappable sensors, and it diagnoses and monitors in flight critical data like battery life, operational weather/wind limitations, structure cracks, and fatigue analysis. But as I have written about here, PrecisionHawk views itself as a data company, not a drone company. As such, it offers a service it calls PrecisionMapper, which is a cloud-based application that gives anyone the ability to upload, store, process, and share their aerial image data.

Precision Drone – Precision Drone LLC is an Indiana company that manufactures multirotor drones built specifically for crop surveillance.  The company also offers Precision Vision™, a crop health imaging software package that delivers a composite video overlay showing the true health of a field in color contrast, which lets growers see how much sunlight is being absorbed by the crop canopy.

SenseFly – Of all the demos given at the show, SenseFly’s fixed-wing flight of its eBee Ag drone was truly impressive. The hand-launched and self-landing eBee is constructed of EPP foam and carbon fiber, with detachable wings. It can fly for 45 minutes to a radio-link range of 3 km (1.86 miles), driven by a LiPo battery-powered pusher propeller. eBee Ag can cover up to 1,000 hectares (2,470 acres) in a single flight.

In this small demo, the operator did a great job of explaining flight operations in real-time. For example, he programmed the aircraft to fly a lawn-mower pattern up and down the demo field.  But when he commanded, the plane would divert off pattern to photograph an area of interest.  When that diversion was complete, the plane would resume the pattern where it left off.  Its images are great, too. The vehicle comes with a 12 megapixel Canon S110 NIR (near infrared) still camera as standard with various sensor options, each one electronically integrated in the aircraft’s autopilot.

Trimble – Similar to SenseFly, Trimble’s UX5 fixed wing aerial imaging solution is impressive. Their unit is fully autonomous, flight programmable, and comes with a dedicated Windows-based rugged tablet. It uses a Sony NEX-5 camera outfitted with a Voigtlander lens.  This makes for very accurate imaging. But unfortunately they do not offer it for sale in the U.S. yet.  Even so, they are working with teams that have regulatory approval for test flights and are perfecting their offering.

Not Present but Accounted For

3Robotics – Agribotix uses (and openly displayed) several 3D Robotics components, including the PixHawk flight controller.  Precision Hawk admits it now ships more units with APM 2.6 open source autopilot system, supplanting Lockheed’s proprietary Kestrel autopilot. DJI – This vendor’s name was mentioned by speakers and users more than any other.  I saw more NAZA-M V2 controllers on vendors’ multirotor platforms than any other and the new app for flight planned missions was the topic of many conversations. MaxMax – Here is where the vendors at the show go to buy an IR-Only, UV + IR + Visible or high resolution (HR) converted camera or send one for conversion. Tetracam – The smaller and lighter the camera or image sensor, the longer the flight.  That’s why Field of View’s multispectral imaging packages are equipped with Tetracam multispectral cameras.

Not Present and Not Accounted For (not a complete list)

Aerial Media Pros AeroVironment Aeryon Labs Altavian AutoCopter CropQuest Draganfly Delair-Tech HoneyComb Lehmann Aviation Lockheed Martin MarcusUAV Yamaha RMAX

It’s not clear why these and many other drone vendors ignore the growing popularity of these types of events. It may be that, like Trimble, they choose to avoid selling their products in the U.S. for fear of being implicated in any wrongdoing by a rogue operator.  Or perhaps like PrecisionHawk, they are selling only to researchers who have and FAA certificate of Authorization or Waiver (otherwise known as a COA) as part of their strategy to be a friend of the FAA.  Either way, they should have been here if even to get to make introductions and know their target market better.

Wrap-up

To reiterate a point in Mitch’s post amidst the curiosity and excitement at PAAS 2014 was a lot consternation about whether commercial drone operations for agriculture will ever happen. As I have written here, if regulations are too strict, this market will collapse. Some regulations on these types of small drones are due for release to comment by the end of this year.  Let’s hope they are not too restrictive and we’ll be at an even bigger show next year.

As always, feel free to comment or you have questions and would like to discuss any of this one-on-one, email me at colin@droneanalyst.com.

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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.

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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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