The real money in drones is in the commercial market

The drone industry has grown so quickly over the last few years in part because the vehicles are so versatile. They come in all shapes and sizes and can be used for myriad purposes. The commercial drone industry has been salivating at the possibilities even as bureaucratic governments have been slow to loosen regulations on unmanned aerial vehicles.

Yet drones are something in which everyone from children to militaries can delight. As drone uses proliferate, the vehicles are becoming more specialized.

This level of sophistication has even led the U.S. Army to team up with the Marine Corps on a program that allows troops to build their own drones using 3D-printed parts. While this is a unique use case, the ability to quickly replace drone parts is useful in many different settings.

Militaries have looked into equipping soldiers with pocket-sized drones. Here Sergeant Scott Weaver is launching a Black Hornet in Afghanistan (Source: UK Ministry of Defense)

The rush into the commercial drone sector is mostly to help companies keep margins high. Drone startups are seeing the value in providing new services to commercial sectors, such as helping insurance companies property appraisals. DJI, too, has put out drones catering to specific commercial uses. Consumer drones still outsell commercial ones by a wide margin, though.

In 2016, more than 2 million consumer drones were sold compared with about 110,000 commercial drones, according to Gartner In 2017, those numbers were projected to rise to 2.8 million and 174,000 respectively. Revenues are forecast to rise to $1.49 billion in 2018, up from $1.1 billion this year, according to the Consumer Technology Association.

At this point, the commercial drone sector is growing faster than the consumer sector. As happened in other industries, consumer drones are getting cheaper thanks to increased competition. Drones aren’t so cheap that everyone wants one, though.

(Source: eMarketer)

A survey from McAfee shows that only 12 percent of people shopping for connected devices this holiday season planned on buying a drone. At the top of the list were smartphone/tablet with 50 percent planning to buy one and laptop at 39 percent. Drones were even beat out by smart home devices, smart TVs, streaming devices, fitness trackers, toys and VR headsets.

While few devices rival the necessity and utility of a smartphone in modern life, it’s safe to say drones have a lot of competition when it comes to consumers’ attention and desire. When it comes to commercial drones, though, even consumers are excited about the future that they could usher in.

In a survey of U.S. smartphone users from Field Agent, 82 percent of respondents said they would consider having a purchase delivered by drone from Amazon. Only 15 percent would consider it from 7-eleven, though. The types of retailers that can gain from this bold new future are limited.

Different countries have different attitudes towards the technology, too. In Denmark, 61 percent of people are comfortable with drone delivery whereas only 27 percent of people in France feel the same way. The rest of Western Europe falls somewhere in between.

For a startup to crack the highly competitive consumer drone market, it must have a pretty incredible product with an equally incredible price. DJI thoroughly dominates the market today, and it isn’t kind to new entrants. Opportunities still abound in the commercial market, but the challenge there is that everyone is still figuring out what those opportunities are as governments slowly deregulate.

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