The excitement around small Unmanned Aerial Systems, referred to more commonly as drones, has been in place for well over a decade. Despite a consistent hype cycle around applications in both the commercial and consumer markets, commercial usage has historically trailed behind that of recreational flyers — in 2018, for example, drone consumer market shipments comprised 98% of the overall aggregate. For a number of reasons, we expect a shift to occur over the next decade, with commercial and industrial usage narrowing the gap.
How Did We Get Here?
Initial, more optimistic forecasts were upended when several drone manufacturers and software providers, such as Airware, went under. Chinese-based DJI has been an outlier in its ability to grow, largely due to its in-house resources and ability to design, manufacture, and market its products all in one city (Shengzen), with a single research and development team centrally located next to the factory. As a result, the company's product design cycle was significantly reduced. Operating as a near monopoly in hardware production, DJI was also set up well to establish the parameters of partnerships with its choice of SaaS providers. These factors have led to DJI's overall dominance in the market, but also to increased commoditization on the consumer side.
Also contributing to consumer market decline is how drones are now regulated, with a clear bias toward commercial applications. In 2018, recreational flyers were sidelined by the FAA's Reauthorization Act of 2018 — a revocation of Section 336, originally legislated to classify the use of drones in U.S. airspace as remote-control toys. Now, stringent rules around FAA drone registration requirements, the implementation of a drone-tracking system, and widening of restricted flying areas for non-commercial drones have led to a decline in usage among hobbyists.
Commercial, Industrial, and Military sUAS Set for Take-Off
As commercial, industrial, and military companies look to increase their use of drones, their focus sits more on the software applications designed to fit their business needs. With interest in the consumer space dwindling, organizations are shifting toward value-added services that complement drone hardware. The demand for analytics, unmanned traffic management, flight management, and repair are all increasing, to provide aerial imagery for verticals like construction, energy, and industrial inspection. Major telco players AT&T and Verizon are using drones for cell tower assessment. By 2030, even with a projected exponential increase in drone shipments and revenue, the commercial, civil, and military sectors will see shipments increase from 2% to nearly 20%.
Checking in on Amazon: their drone delivery service has not yet flourished to the extent that we continue to hear of its inevitability, but this is due primarily more to the FAA regulations needed to operate commercially than complications around hardware or software. Within ten years, they are expected to lead drone deliveries toward revenue of up to $10B.
Get an in-depth look at what's on the horizon for drones in our market data report, The Small Unmanned Aerial System Ecosystem, part of the Industrial, Collaborative & Commercial Robotics research service.