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Will the U.S.’s New Drone Pilot Certification Accelerate Commercial Growth?

FAA testing and certification for small UAS remote pilot certificates begins in earnest this month, but does that mean the commercial drone industry will see rapid growth?

THE FACTS:

Beginning August 29, 2016, the new small UAS Rule for commercial drone operations in the U.S. takes effect.  One very important change is that operators will now have to obtain a remote pilot certificate with a small UAS rating. Under the new rule—also known as Part 107—the person actually flying the drone must have this certificate, or be directly supervised by someone who has one. In advance, the FAA has published a variety of documents to assist businesses seeking to be compliant with the new regulation. You can find an article with references to those documents here.

WHAT’S COOL AND WHAT’S NOT:

The new rule (and the new certification process) marks a complete shift in the way the FAA permits commercial drone operations in the National Airspace System (NAS). Under the old approach, known as Section 333 Exemption, companies or individuals could apply for an airworthiness certificate exemption and then the FAA would grant them on a case-by-case basis. Commercial operations rules also required the pilot-in-command of drone operations to have at least a sport pilot’s license.  At last count (8/19/2016), 5,542 petitions had been granted. The process was intended to provide safe and legal entry into the NAS, thus discouraging illegal operations and improving safety. It was anticipated that this activity would result in significant economic benefits.

The point here is Section 333s were granted to the business operators of the aircraft–not the pilots themselves. The new rule is pretty much the opposite.  It is a pilot-based certification that switches the responsibility from a business entity to a person.

THE RUB:

In March 2016, the FAA released its annual Aerospace Forecast Report Fiscal Years 2016 to 2036, which cites potential sales of more than 600,000 commercial small UAS requiring registration, growing to 2.7 million by 2020. This forecast was developed in conjunction with the Teal Group Corporation. They segment the commercial market into industrial inspection, real estate / aerial photography, agriculture, insurance, and government with industrial inspection taking the bulk of the market at 42%.

But as I have written in Diversity and Hype in Commercial Drone Market Forecasts, Teal’s forecast is inflated and out of touch–as are a lot of others. We currently track 41 different forecasts. The trouble is none take into account existing market trends or the economic force that a lower barrier to entry will have on pricing of drone-based business services. To put this disconnect into perspective, one only need look at other related forecasts.  For example, the revenue of photography services in United States in 2020 is expected to be about $6.7 billion. Portrait studios account for about 70% of industry revenue; commercial photography for about 30% of that. That means commercial photography is only a $2 billion market.  How we get from there to PwC’s prediction that $127.3 billion of current business services and labor will be replaced by drone-powered solutions is baffling to say the least.

BOTTOM LINE:

Our survey data going back to 2014 and even our most recent report tells us that the film/photo/video market is–and will probably always be–the largest commercial drone market segment. Neither Teal nor PwC forecasts account for the full potential of drones in that segment, nor do they incorporate any first-hand knowledge from those who’ve already operate in that segment.  In contrast, I have heard from scores of photographers and videographers who operate their small UAS for business without regard to legality. Most never applied for a Section 333 because of the stringent pilot license requirement. Most have been waiting for this day to arrive so they can get certified and “come out of the shadows” to operate legitimately. Most will never do industrial inspections, or agriculture, or any of the other business services being predicted for commercial drones.

This article says 3,351 people have already signed up with the FAA to have their aviation knowledge tested on the first day possible. I predict most of these are either film/photo/video operators who were granted Section 333s and never had a pilot available to them or those operating in the shadows. I’m just not convinced that means big money for the industry yet. We’ll see what happens, but one thing is for sure—we’ll see a lot of very small businesses (read: photographers and videographers) now openly advertise their aerial services.

Image credit: Shutterstock

This post first appeared on DRONELIFE.com

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DJI’s Foray into the Enterprise Drone Market

Will its reliance on channel partnerships address the real needs of commercial operators?

THE FACTS:

Without the usual fanfare associated with a new product release, consumer drone manufacturer DJI opened up a website (http://enterprise.dji.com) in July 2016 that is dedicated to commercial / enterprise use of their drones. The website lists five industrial uses: agriculture, energy, public safety, media & creative, and building & infrastructure. The pages present use cases, news, and product solutions that showcase their technology, software development kit (SDK), and industry-specific partnerships.

Since that time, DJI has made several announcements that appear – at lease on the surface — to target the enterprise market for drones with end-to-end solutions. This includes announcements for:

WHAT’S COOL AND WHAT’S NOT:

It’s impressive that DJI understands that they need to upscale their offerings if they want to compete in the growing enterprise drone market. Past product announcements reinforce DJI’s desire to appeal to industrial use.  Product add-ons like the Zenmuse XT thermal imaging camera (developed in conjunction with industry leader FLIR) have led to a broadening of DJI’s channel with dedicated enterprise offerings like this one and this one. Product platforms like the Matrice 100, the Spreading Wings product line, and the Agras MG-1 agricultural spraying octocopter all point to an increasing focus on commercial use.

Enterprise drone data service providers have noticed the popularity of DJI drones and recognized the need for a DJI-based solution.  Several previously open source code users — including DroneDeploy, PrecisionHawk (DataMapper), and Skycatch — now have dedicated DJI mission planning and data apps that take advantage of the SDK.

As our research shows, DJI leads the general market in small drone sales with a 50% market share in North America across all price points. But in the markets for higher priced commercial drones, DJI does not hold that advantage – even in the media and creative market that is their specialty.  In those markets, where drone solutions cost more than $7,500, DJI’s market share drops to 33% and goes down to 18% for even higher priced solutions. So, their strategy to grow product sales via partnerships makes sense.

However, what’s exceptional has yet to be fully developed and what’s already released seems out of focus. For example, DJIs investment in Hasselblad has so far only yielded the A5D & DJI M600 bundle – a bundle that DJI does not list on their enterprise site and a bundle which DJI expects Hasselblad to position and market. As a follow-up I called several Hasselblad dealers to see who would buy it and I got some pretty shaky answers to say the least.  To this day, I’m still in doubt about who is the real buyer and what will be the volume of sales.

THE COMPETITION:

On the surface it seems like DJI is making the right moves. But look closer, and you will find it’s clear they don’t understand the markets they’re targeting, don’t understand how much their competition is entrenched already with the customer, and don’t understand solution selling. I liken it to Apple when it first started trying to sell to enterprises. When enterprises soon realized Apple mobile products didn’t meet their security requirements or their workflow and data storage needs, third-party vendors filled the gap.

In a recent series of white papers called “The Truth about Drones in…” I wrote about the vendor competition in the industries DJI wants to target. For example, in The Truth about Drones in Construction and Infrastructure Inspection, I discuss how investors are already taking positions. In June 2016, Kespry closed a $16 million Series B round, and software company Autodesk Inc. (via its Forge Fund) made an investment in drone manufacturer 3D Robotics. The report also discusses how brands like Leica Geosystems, Lockheed-Martin, Riegl, Trimble, and Topcon are much better known among aggregates and construction companies. I could go on about how hard it will be for DJI (or anybody else) to differentiate its current technology from other vendors that provide drones for the same markets and industries they want to serve, but you get the point.

BOTTOM LINE:

It’s pretty safe to say that DJI’s current strategy of repackaging and repositioning existing products to “fit” the enterprise market is not a winner. Mind you, DJI does make and sell some great products, but as we have seen so far, they are wholly dependent on others to provide customer solutions. It’s up to their channel partners to figure out the customer problem being addressed and how to bundle a solution. The poster child for this in the surveying and mapping market is Phoenix Aerial Solutions, which packages up LiDAR drone solutions.

One thing is for sure. With so much dedication to R&D we will see more products from DJI to support the enterprise market this year and next — and we will see their channel partnerships flourish.  However, don’t expect to see a fully supported turnkey survey-grade LiDAR drone solution from them anytime soon.

This post first appeared in DRONELIFE

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The Truth About Drones in Mapping and Surveying

According to 2015 statistics from the US Department of Labor, there are 44,300 surveyors in the United States. But mapping is practiced by a larger population of cartographers, topographers, photogrammetrists, civil engineers, and geographers – it’s not exclusive to the surveying industry.  The American Society of Civil Engineers lists more than 150,000 members in 177 countries, and the Imaging and Geospatial Society has 7,000 supporters.  All of these disciplines can be grouped under a broader category called geographic information systems (GIS).  GIS professionals provide a wide variety of land-related services like identifying property boundaries, subdividing land, and surveying construction sites for placement of buildings. They also produce topographic and hydrographic maps, volumetric calculations for stockpiles, and flood insurance maps, among other services.

The number of surveyors is actually projected to decline by two percent from 2014 to 2024 because of improved surveying technology.  Even though surveyors are a fraction of the broader population of GIS professionals, how will the improved surveying technology that is affecting them apply to that broader GIS population? And given the downbeat forecast for surveyors compared with the numerous upbeat billion dollar projections of drone use from the FAA and other industry observers, the question becomes, Where do commercial unmanned aircraft systems (UAS) or drones fit into the surveying technology mix?

With those questions in mind we just completed a study titled “The Truth About Drones in Mapping and Surveying,” The report is the fourth in series of studies that look objectively at each major commercial market for drones and drone technology. This report is co-authored by Bill McNeil, Contributor / Advisor, and Colin Snow, CEO and Founder, Skylogic Research, LLC, and it shows how small drones have been used successfully in surveying and mapping thus far and outlines the lessons learned. It goes on to discuss the opportunities and challenges for GIS professionals, reviews competitive and traditional approaches offered by incumbent technology, and discusses what’s next for drones in this sector.  Here is an excerpt:

“Drones are going to have a major impact on the surveying and mapping industry, but perhaps to a lesser degree on traditional surveyors.  As mentioned earlier, the Department of Labor is forecasting a 2% drop in the number of surveyors from 2014 to 2024.  On the other hand, the Labor Department is projecting 29% growth for the photogrammetry category.  This means more and more photogrammetrists will do surveying work and more surveyors will use photogrammetry tools for mapping.  In other words, inexpensive data collected from drones has and will continue to blur the lines between photogrammetry and mapping.

There is another issue at play here.  The process of physically flying a drone is not unique to map making.  The type of data collected is determined by the instrument payload — not by the drone operator.  In other words, it really doesn’t make any difference if the application is precision agriculture or mapping a pipeline, the deliverables are the information extracted and processed by the crop consultant, the photogrammetrist, or the surveyor.

Drone technology is moving extremely fast.  It’s very possible many surveyors would rather hire a service provider to collect data than invest in a tool that can be obsolete is as little as six months.  They may also consider short-term leases to ensure their technology is relatively current or just rent a drone when needed.  Regardless of how small drones fit into the workflow, they will not only affect the industry, but they will also create new opportunities for independent contractors who, based on their experience, may be able to fly and collect data less expensively than surveyors.  The value add is the knowledge and data processing skills of the surveyor and photogrammetrist, not their drone-flying skills.”

You can get the free report here.

If you have questions about what’s in the report or would like to comment on it after reading it, write me colin@droneanalyst.com.

Image courtesy of BZ Media.

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Is Esri’s Drone2Map a Game Changer?

Features should appeal to Esri users, but will they appeal to non-Esri users?

THE FACTS:

In February 2016, Esri released an application called Drone2Map for ArcGIS.  Drone2Map (D2M) takes raw image data from drones and creates digital surface models, orthomosaics, 3D-point clouds and 3D PDFs that can be shared.  Data processed by Drone2Map can also be rendered in Esri’s ArcGIS online web service and integrated into ArcGIS for further processing. The photogrammetry engine in Drone2Map is Pix4D.  Esri licenses D2M as a yearly subscription for $3,500 plus a nominal data storage cost.

Esri’s ArcGIS platform provides maps and a wide variety of analytical tools to governments, business, and utilities.  Applications range from finding the optimal retail store location, to mapping pipelines, to planning public works projects.  In the past, Esri has been rather lethargic in adopting new technology, but to their credit, they have been a forerunner in recognizing the potential of drone-generated data. This new product is proof of that.

WHAT’S COOL AND WHAT’S NOT:

If you don’t know Esri, then you don’t know geographic information systems (GIS). ESRI so dominates the GIS industry that the name GIS and Esri are almost synonymous. Esri has been doing business since 1969, has 9,000 employees in 67 countries, 41 offices worldwide, and has annual sales north of $900 million dollars.

More than 350,000 organizations use Esri products, but the number of users is actually much larger because many of these companies have licensed multiple copies of their software.  In other words, Esri’s user base is large enough be a market in itself.  The D2M feature set, combined with ArcGIS integration, should be appealing to current Esri users.

On the downside, Drone2Map only becomes an end-to-end solution when it is used with the ArcGIS platform, making it an additional cost consideration for non-Esri users.  Also, sales of D2M, like other drone data solutions, will be paced by the speed at which drone technology is adopted by enterprises and the data is integrated into the GIS workflow.

THE COMPETITION:

Harris Geospatial Solutions and Icaros, Inc. have formed a partnership that enables Harris to sell Icaros’s One Button imaging processing software.  Like Drone2Map, OneButton generates 2D, 3D, and orthorectified images from drone data.  OneButton may not attract Esri customers, but it will be a compelling alternative for those who don’t use Esri tools.

There is an irony in Esri’s offering—Pix4D is both a supplier to and a competitor with Esri.  Irony aside, we see this as a win/win situation for Pix4D because, being part of Drone2Map, they profit from each Drone2Map sale and from sales to non-Esri customers.

There is another twist in the story here. Esri announced last month a beta integration of its ArcGIS software with the very popular DroneDeploy software. But right now, DroneDeploy offers much more to surveyors and mappers than Drone2Map because it offers a simple mobile app for mission planning, data-to-cloud upload, and the same sharable data analysis (digital surface models, orthomosaics, 3D-point clouds, 3D PDFs, etc.) that Drone2Map does. It seems to us a push-button integration to ArcGIS just makes DroneDeploy more valuable.

BOTTOM LINE:

Drone2Map for ArcGIS is important to Esri because it works on several different levels.  For one, the strong feature set and ArcGIS integration should attract current users. If one half of one percent of Esri’s 350,000 users purchase Drone2Map, Esri will realize a revenue gain of over $6 million.

In addition to generating revenue from their user community, Drone2Map also works as an Esri promotional tool.  Drone companies like 3D Robotics, senseFly, and Drone Deploy all want to promote their solutions as working with Esri products.  This is free publicity and introduces prospects outside of Esri’s user base to the company.

Drone2Map should sell well to the Esri user base but considering the fact that it is not a complete mobile end-to-end solution, Esri will be challenged to successfully find new customers outside their user base.  Also, the commercial drone industry is fast moving and very fluid.  Esri may have a difficult time keeping up.  However, you can never count Esri out.  Once the market settles, Esri will be a formidable competitor.

Image: Esri

This post first appeared on DRONELIFE.com

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New Report: Drones in Public Safety and First Responder Operations

It may not seem like it, but drones are still in their infancy and only proving themselves through the rigorous testing done privately, commercially, and by state and federal government agencies. Despite the tangible benefits that drones can provide, the public has mixed sentiments about their use by law enforcement, firefighting, and search & rescue operations.

As early as 2012, this AP-NCC poll found a third of the public fears that police using drones for surveillance will erode their privacy.  But negative sentiment is changing.  In 2013, an Institute for Homeland Security Solutions (IHSS) and RTI International survey found 57 percent of the general public supports the use of unmanned aircraft systems for any application. It found:

  • 88 percent of the general public supports drone use in search and rescue operations
  • 67 percent support drone use in homeland security missions
  • 63 percent support drone use in fighting crime

Nevertheless, despite fears by segments of the public and civil rights proponents like EPIC that broad use of drones heralds a domestic “surveillance state,” many more believe unmanned aircraft systems (UAS) provide tremendous benefits and dividends for public safety. This includes everything from traffic accident investigation, to forensics, to fire investigation and damage assessment.

With that in mind we just released our third research report series of studies that looks objectively at each major commercial market for drones and drone technology. This study titled “The Truth about Drones in Public Safety and First Responder Operations,” shows how drones have been used successfully by law enforcement, firefighters, and search & rescue thus far, reviews competitive and traditional approaches using incumbent technology, discusses the opportunities and challenges posed by regulations, outlines the lessons learned, and discusses what’s next for drones in this industry. Here is an excerpt:

“All these use cases are vital public safety matters that civilian market drones are well suited to handle. Cities, towns, and municipalities facing strained budgets and dwindling resources may more easily be able to afford small drones than traditional big ticket first response equipment and personnel. Consequently, drones will give some local governments a bigger bang for their buck.

But would-be adopters need to know that in the U.S., the Federal Aviation Authority (FAA) controls the skies and has created regulations (safety standards) governing the operation of aircraft. Thankfully, not all, but still some, of the Federal Aviation Regulations (“FARs”) apply to public aircraft. The FAA allows first responders with an FAA certificate of waiver the ability to create their own safety standards for the pilots, the aircraft, and maintenance. Additionally, first responders can choose to also operate under the newly created and liberal Part 107 small UAS regulations if that benefits their operations more.

In the U.S., it’s reported there are almost 18,000 state and local law enforcement agencies with at least one full-time officer or the equivalent in part-time officers.  That includes over 12,500 local police departments and over 3,000 sheriffs’ offices, and 50 primary state law enforcement agencies. The National Fire Protection Association reports that in 2014, there was an estimated total of 29,980 fire departments, of which 19,915 (about two-third) were staffed only with volunteers.  Smaller law enforcement agencies and volunteer fire departments that have limited finances stand to benefit greatly because the price entry point has decreased for consumer drones (like the one pictured in Figure 3), their capabilities have increased, and the new liberal Part 107 regulations make it easier to legally operate.”

The report details major use cases and discusses the challenges and lessons learned by police and search & rescue teams including the lessons offered by Gene Robinson, head of Unmanned Aircraft Operations for the Wimberley Fire Department, from his work in the aftermath of the 2015 Texas Memorial Day floods.

You can get the free report here.

If you have questions about what’s in the report or would like to comment on it after reading it, write me colin@droneanalyst.com.

Image courtesy of AeroVironment, Inc.

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