With its ubiquitous Phantom drones, Chinese manufacturer SZ DJI Technology Co. brought aerial photography to millions. Now, with dozens of competitors biting at its heels, the world’s biggest producer of consumer drones needs to prove that its products are more than just glorified selfie sticks.
"Right now, DJI is the king of the drones-are-cool market, they are not king of the drones-are-a-tool market," said Colin Snow, founder of Skylogic Research, which advises corporations using drones. "They’ve entered where they don’t have a lot of experience."
The nine-year-old company is developing unmanned aerial vehicles (UAVs) for agriculture and surveying as dozens of competitors inside China and around the world begin to flood the market with cheap drones, from $10 mini toys to sub-$100 camera carriers.
Growth in the consumer-drone market is going to plateau in the next year, said Gerald Van Hoy, analyst at technology research firm Gartner Inc.
"There are a number of people who will buy one and they will not use it again,” Van Hoy said. “It is a novelty item for them, then it will go to their attic.”
So Shenzhen-based DJI is pouring money into its development kit, which allows software developers to write their own applications for specific tasks, similar to the way Apple Inc. does for its iPhones.
Up for grabs is a market for aerial mining surveys, pipeline inspection, search and rescue, crop spraying and hundreds of other commercial tasks that’s expected to reach $127 billion by 2020.
"The real question is which of these market opportunities at scale provides incentive for us to build products,” said Darren Liccardo, head of DJI’s Palo-Alto R&D office, which opened last year and has a team of about 20. “Clearly agriculture will definitely be a large market.”
Here is a sample of key targets for commercial drone makers and some of the leading manufacturers.
Farmers were some of the earliest civil adopters, using drones to identify differences in crop conditions. Yamaha Motor Co. has been dusting crops in Japan with UAVs for more than two decades. With the cost dropping for cargo-carrying drones, DJI and others are building crop-spraying and remote sensing vehicles that can help reduce chemical use and improve yields. It has been estimated that precision agriculture will account for about 80 percent of the U.S. market for commercial UAVs.
Last year the U.S. Federal Aviation Authority issued the first exemption for agricultural drone use outside of university research. DJI released its eight-rotor Agras MG-1 last year, with a 10-kilogram tank, followed by a thermal-imaging camera for remote sensing. It’s up against companies like Yamaha and local rivals like Shenzhen MicroMultiCopter Aero Technology Co.
Where the civilian drone boom began. Companies are now using the devices for everything from filming Bollywood weddings, to inspecting remote or hard-to-reach places, like oil rigs.
More than 5,000 exemptions have been granted by the U.S. Federal Aviation Administration, many of them for some form of photography or surveying. Between September 2014 and January, almost 2,000 were filed for real-estate firms to take images of sprawling properties or show the view from an apartment tower that’s yet to be built.
"If you look at a large utility company, they’re spending $40 million a year for helicopter service," said Jonathan Evans, chief executive officer of Skyward, a producer of flight-planning software for companies including those that inspect phone towers. "If you move the needle just a little bit, it has serious returns on the bottom line for the company."
The majority of the U.S. exemptions were for DJI drones and from companies with less than 10 workers. Major competitors in aerial imagery are Paris-based Parrot SA, which acquired Sensefly to expand into commercial quadcopters, and 3D Robotics Inc. in Berkeley, California. Startups making waves in the sector include Yuneec Electric Aviation and Ehang Inc.'s UAVs.
Leading the media fuss is the question of when we’ll get packages to drop out of the air. DJI says that for now it’s not pursuing delivery drones, though its agricultural model could be adapted to do so.
For retailers like Wal-Mart Stores Inc., Amazon.com Inc. and Alibaba Group Holding Ltd., which are all testing drones for deliveries, the UAV promises to solve the "last mile" problem -- the costliest leg of a package’s journey to the customer’s door.
"You break down the economics of supply chain management and you realize why Amazon’s going after this," Skyward's Evans said. "They can make a lot of money here."
Regulatory hurdles will likely mean commercial operation is years away -- most countries ban drones from flying out of the operator’s line of sight or over crowded areas. Meanwhile, they are being used in remote areas to send and collect medical supplies and tests.
The Rwandan government partnered with San Francisco-based Zipline to fly blood bags at 100 kilometers per hour to remote hospitals. Other to watch are Matternet in Menlo Park, California, and startup Flirtey, which said it made the first FAA-approved urban drone delivery of an emergency kit in the U.S. this year.
Still mostly a hobby sport, drone racers have big plans for the sport, with commercial leagues to rival Nascar or Formula 1. Think Star Wars pod racing without the pilots.
At the Dubai World Drone Prix back in March, 15-year-old Luke Bannister from the U.K. won the $250,000 top prize with a custom device built on U.K.-based KC Frames platform. Producers of ready-made speed-demons include Arrishobby.com, Horizon Hobby LLC, Walkera Technology Co., and Shenzhen Hubsan Intelligent Co.
And then there’s the dream of anyone who’s ever been stuck in a traffic jam: the passenger drone.
Guangzhou, China-based Ehang grabbed the limelight at this year’s Consumer Electronics Show in January with its Ehang 184, a 440-pound personal flyer controlled by a smartphone that can whisk someone 500 meters above the traffic.
The oversized, white quadcopter has an air-conditioned cabin with a reading light. Ehang says it has successfully flown the aircraft in rural areas with a company engineer inside, but a commercial version is at least five years away.
Even then, regulations and air safety fears mean that it’s likely to be a lot longer than that before we can catch up with James Bond, whose gadgets in “You Only Live Twice” included the rocket-armed Little Nellie personal helicopter.
QuickTake Domesticating Drones
"We will eventually get to that point where passengers feel enough safety in the system to trust it. For now, I don’t think that exists," said Brent Terwilliger, program chair of unmanned systems at Embry-Riddle Aeronautical University in Daytona Beach, Florida. "We’re going to need to see autonomous vehicles on the road. Once we see those operating reliably, safely, efficiently, then we can add a new axis."
Meanwhile, Ehang Co-founder Derrick Xiong said the company is looking into using the drone for search and rescue or tourist flights.