Drones, similar to the Internet and GPS, were once developed for military purposes. But nowadays they’ve become powerful business tools, with various applications in agriculture, logistics, government, or emergency services. These devices, equipped with tons of sensors, offer completely new possibilities for collecting valuable data. But it is the ‘drones as a service’ model that creates the real value.
The demand for drone data services has created a $100 billion market opportunity between now and 2020, according to Goldman Sachs 2016 research report. Beyond the military, businesses start to explore the possibilities for commercial use, with the potential market size valued at $13 billion in the same period. The consumer market, the first market developed outside of the military, is fairly stable, with an opportunity to grow.
PwC, a global consulting and accounting firm, estimates the market for drones powered solutions at around $127 billion (see Table below).
Data is the real value
The commercial market is different than the consumer or military, where the focus is still on the technological sophistication of the devices. The businesses see drones as a supplementary tool for collecting data that extends existing methods. Therefore, to minimize the cost of acquisition, they often prefer to outsource the work to companies that are specialized in operating drones and analyzing the data.
The market ecosystem ranges from telecom providers for network communications, software developers who create flight control systems or process data (via analytics software), to system integrators who help companies bring drone data into their IT systems.
Drone-powered services are best suited to businesses that need mobility and high quality of data, often in real-time. In particular, companies with assets dispersed over large areas benefit from the integration of drones into their day-to-day business.
Firstly, adjust your business strategy
Companies interested in using drone (data) technologies should adapt their business and IT strategies before investing. IT architectures, decision-making, or talent development (increased need for data-savvy people) must be aligned. Otherwise, it’s just playing around with expensive toys.
Moreover, one of the many choices a company has to make is to determine whether to run a drone service in-house or to outsource. Several factors influence the decision: upfront investment, data security, innovation capabilities, existing know-how, or planned usage of drones (utilization).
Often, businesses with large infrastructure assets prefer to run their own drone services. Railway companies, such as the French SNCF, for example, have their own program for network surveillance. And so does the mining company, Rio Tinto, which deploys drones for 3D mapping, inspection or surveillance purposes. In the airline industry, EasyJet, a British low-cost carrier, plans to use drones to inspect airplanes after lightning strikes. The inspection time could be reduced from several hours to just half an hour.
On the other hand, outsourcing drone operations has its benefits too. Besides the financial advantages (lower upfront investment), one of the major benefits is the data sharing / benchmarking. If several similar companies collect and share data, industry-wide solutions could be developed, as more data means better insights.
Often, companies, where technological advancements are not at the core of their operations (agriculture), prefer to outsource as they are not prepared to invest and maintain such programs by themselves. Due to fast-changing technologies in the market (new sensors, batteries), it is too risky for businesses to run such programs in-house.
Operating drones is, however, not only about investing in hardware or adhering to government regulations. A company needs strong internal analytics capabilities (understanding of Big Data or Machine Learning concepts). Specific skills are needed as well as a robust IT architecture. This means competing for talents with technology-driven companies which can be difficult as the market for such specialists is already overheated.
Challenges of the drone market
Anticipating all possible applications of drones services is complex, as it is an interplay between different technologies. On one side there are the technological advancements, such as battery technologies, allowing for more flying time. On the other side, there is progress in fields such as Machine Learning, with completely autonomous, self-learning algorithms.
Despite the positive market forecasts, the drones’ ecosystem is still forming itself, with numerous challenges waiting to be solved.
For instance the line-of-sight- regulation, where many countries allow drone operation only within the sight of the pilot. For drone operators, it is also necessary to address the questions around insurance and the damage they can cause (or damages caused to the drones).
These mentioned limitations are to some extent an opportunity for a drone as a service provider, as they usually have the full capability of adhering to any required regulations. The initial cost of entry into a drone operation service can be rather high, therefore customers turn to specialized providers where they get a full-service package for a fee.