The Business of Drones: A Tale of Two Cities

This post looks at who will dominate the lucrative civilian drones market - the giant defense contractors or the small innovative start-ups.

The year was 1775.

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way.. “

Ah, the famous opening lines of A Tale of Two Cities. The Charles Dickens passage seems to create a sense of sweeping possibility: the age is everything and nothing at all. Examined closely, the passage also suggests that this is an age of radical opposites with almost no in-betweens. And that is how I would characterize the current state of the small drones business – radical opposites. On the one hand you have the large public defense-related drone contractors like AeroVironment , maker of the Raven, Puma, and Shrike, looking now to capture commercial opportunities in the civilian market. For our purposes they represent the London royal establishment. On the other hand, you have the small private startups like MarcusUAV and Vorobetz looking for a chance for liberty from restrictive air space regulations. They represent the Paris freedom fighters.

Just as in the novel, each city had its own drama and naiveté, so, too, do our players. While everything’s coming up roses in London, everything’s coming up dead in Paris. In fact, in Paris they are so unhappy that they’re beginning to band together as ‘citizens’ of a new republic. They are at their core a revolutionary group. But we can’t tell that they’re revolutionaries, because they’re super-secret. For the most part, they operate their businesses in an underground – as you will see.

Read more here: http://droneanalyst.com/2014/03/07/the-business-of-drones-a-tale-of...

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Tags: DoD, FAA, Pirker, UAS, UAV, business, drones, innovation, regulations

Comment by Gary McCray on April 25, 2014 at 11:01am

I think "A Tale of 2 Cities" is the ideal foil for what is happening.

I hope the long term outcome works out better than it seems to be going so far.

With the same logic that the Cell phone kill switch legislation was defeated by you have all the big economic interests focused on how they can profit and one of their most effective means is through lobbying to suppress the freedoms of everybody else.

In this case they will seek rules and certifications that will ensure that only their equipment is allowed to fly.

If they are successful, they will essentially destroy the civilian market before it has literally and figuratively had a chance to take off.

Because the civilian market simply can't afford what they are making.

And because they are military contractors, they don't actually know how to make it affordably for the civilian market even if they wanted to.

Fortunately, also kind of like cell phones it is already totally out of control and simple annihilation of the civilian market just isn't going to work.

There is also the matter of scale and resources.

If the FAA basically outlaws everything that isn't a multi hundred thousand dollar flying venture they will have clearly and publicly made it clear that they have in fact gutted American civil drone use while global examples will make clear the foolishness of such an approach - to - everybody.

Also from a practical standpoint, the Chinese imports like Phantoms and Hubsans are already beyond any possibility of control short of breaking off free trade with China.

And the little drones are simply unpractical to regulate and there are going to be more an more smaller ones with full high performance rock solid HD video and camera capability.

It is really hard to successfully regulate something the size of a dinner plate and is completely impractical to try.

The onbly reasonable outcome (and I realize it may take a while before a reasonable outcome can be expected) is for the FAA to establish some sort of weight class below which there are rules for safe operation which as a citizen you will be expected to follow, but for which formal training and craft "certification" are not required.

Whatever that size is, that is where the true civilian market lies. be it 1, 5, 10 or 20 pounds for both fixed wing and copter.

And if the FAA doesn't do something like that they leave themselves facing a completely unenforceable nightmare that is only going to get worse as time goes on.

Of course, they probably won't do that initially and from their current actions they seem a bit slow on the uptake, but eventually simple practicality will force them to.

My point is, the future of the civilian market is in small, intrinsically safe drones, we already have (thanks to cell phones) tiny highly capable cameras and that is the most important application for drones.

There will also be a market for larger drones that can actually do things (spraying, weed cutting and tree trimming and probably even house painting and a lot more, many of them tethered) but the legislative road to encompassing those needs is going to be long, slow and painful (although I think tethered drones might expect (hope for) an easier route).

Door to door delivery is a marketing pipe dream like Moller's flying car.

As it stands now for early commercial use - Think Small - Micro and Nano - they are unstoppable.

Comment by Colin Snow on April 25, 2014 at 11:08am

Good comments Gary. I love the statement:

It is really hard to successfully regulate something the size of a dinner plate and is completely impractical to try.

Cheers

Colin

Comment by Sam Curcio on April 25, 2014 at 11:55am

It may be that the FAA will come up with two sets of regulation pertaining to two different weight classes. One class for smaller UAVs, which are able to do photography and sensing, and the other class for the larger versions that can do spraying and heavy lifting activities. And, with those regulations will come licensing.

It's not hard to see this. The AMA allows only licensed model aircraft owners to fly at any of its events. That being so, there isn't much complaining going on about it either. If you want to fly, you obey the rules.

This will eventually weed out the irresponsible individuals that don't take flying seriously. Along with the cost of keeping current, the sport could be self-policing. If operators know they are being scrutinized by their peers then they will act appropriately. If all they want to do is hot dog, they will have to find some other activity in which to do it. Basically, we must band together to say, "not on my watch."

Comment by Jack Crossfire on April 25, 2014 at 1:41pm

They both hire the same PhD's & depend on the same university research.  It's really the makers who are locked out.


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Comment by Gary Mortimer on April 25, 2014 at 2:02pm

Don't matter USA is so 2006 when it comes to commercial use.

Comment by Colin Snow on April 25, 2014 at 3:05pm

I have sufficient data that shows if the FAA puts in place unfavorable regulations they will collapse the market. Stay tuned for the results of my research which comes out at the sUSB Expo in San Francisco May 8th.

Comment by Sam Curcio on April 25, 2014 at 3:17pm

The market is not yet strong enough for over-regulation.

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