Large Tech Companies Ascendant in Emerging Drone Industry

Just over a year after the FAA released its seminal Part 107 regulation allowing for the commercial operation of small unmanned aircraft systems (UAS), the drone industry is pulling in opposite directions. Large, publicly traded technology companies eyeing future autonomous operations populate the high end of the market; small entrepreneurial companies and individuals with drones in their car trunks form the base. A few medium-sized, venture capital-funded companies hold the middle ground.

Between those top and bottom layers, the commercial demand for drones is organizing along several verticals. The InterDrone conference in Las Vegas in early September presented one way of slicing and dicing the industry; it was organized into six tracks: construction; surveying and mapping; precision agriculture; mining and aggregates; police, fire and emergency response; and infrastructure inspection. Other markets such as insurance, real estate and newsgathering might qualify as verticals in their own right.

InterDrone was one of three broad-based drone conferences planned this fall, with Drone World Expo and the Commercial UAV Expo following in early and late October, respectively. There are also industry-specific and regionally focused drone events, as well as the longstanding annual conference hosted by the Association of Unmanned Vehicle Systems International, which is now called “Xponential” and oriented more toward larger aircraft. Industry observers doubt all of the newer events will survive. One conference that was scheduled in July—Ascend—ultimately was cancelled, and its sponsor, the glossy newsstand magazine Drone360, in September announced that it was folding because its audience “has not grown at the anticipated pace.”

Chipmaker Intel was prominent at InterDrone and commanded a leading position on the exhibit floor. In a keynote address, Intel CEO Brian Krzanich, who serves as chairman of the FAA’s blue-ribbon Drone Advisory Committee, reprised his “data is the new oil” theme and introduced the new Intel Insight Platform, described as a cloud-based data processing, analytics and reporting service for data collected by commercial drones. Separately, avionics and aero engine manufacturer Honeywell announced its own “InView” inspection service aimed at energy, utility and infrastructure companies using the Intel-branded Falcon 8+ multi-rotor drone.

Data collected and then shaped into “actionable” information is what drones offer. Artificial intelligence, machine learning, neural network software, the holy grail of full automation will guide them, according to Krzanich and other keynoters at InterDrone, which featured speakers from Cisco, Qualcomm and visual computing developer Nvidia, among other companies participating in the drone space.

Traditional Aerospace Companies Lead

High-technology companies were ascendant at the conference. “For all of the entrepreneurial goodness on display, it is becoming increasingly apparent that the future of the industry will increasingly be shaped by big, primarily publicly traded players like Intel, Qualcomm, Nvidia, NXP and Verizon,” wrote Christopher Korody, founder of the Drone Business Center, a Taos, New Mexico-based consultancy, in a blog post.

“These are companies that have talent and can afford the investment and gestation period,” Korody added. “In part, it's because not all of their eggs are in the drone basket. Development costs are being spread across multiple markets—IoT [Internet of Things], automotive, aerospace, services and others.”

Technologically savvy themselves, traditional aerospace defense companies such as Lockheed Martin and AeroVironment have not ceded the small-drone market to competitors from the consumer technology world. Lockheed Martin offers the Indago quadcopter for precision agriculture and other applications. AeroVironment, which has supplied thousands of hand-launched Raven, Puma and Wasp drones to the U.S. and other militaries, last November unveiled the Quantix hybrid fixed-wing and multi-rotor drone, which it designed to capture high-resolution color and multispectral NDVI (normalized difference vegetation index) imagery over cropland, as well as for monitoring, inspection and damage assessment by the energy, utility and transportation industries.

“AeroVironment, with its 20-plus years of history, has done this for our military and 40 other countries around the world in the difficult and harsh environments that you can imagine. Our drones have been in operation for hundreds and thousands of takeoffs and landings across the world, for years,” Wahid Nawabi, AeroVironment’s president and CEO, told the InterDrone audience. “We’re the largest publicly traded drone company in the world, and we’re now taking all of those core competencies and applying it to these industries.”

Likely making one of his final speeches as FAA administrator, Michael Huerta summarized the progress his agency has made since Part 107 became effective on Aug. 29, 2016. During the first full year of the regulation, the FAA issued 59,016 remote pilot certificates and registered more than 79,000 commercial drones. The agency approved nearly 1,000 waiver requests, most seeking permission to fly drones at night, and some 7,000 authorizations to fly in controlled airspace, including more than 900 to fly in Class B airspace around major airports.

“You know, when I began my tenure as FAA administrator in January 2013, very few people would have envisioned that within a few years, drones would be the fastest-growing field in aviation,” reminisced Huerta, who can justifiably claim to be a founding father of introducing drones into the airspace. “As an agency, we at the FAA realized very early on that we had to change our regulatory approach in order to safely integrate this new technology without stifling innovation.”

Michael Winn, CEO of DroneDeploy, a venture capital-backed developer of drone mapping software, described a pipeline that begins when large companies hire individuals or smaller firms to provide drone imagery. “What most companies we’ve seen doing is the first time they get a drone used on their job site they actually contract it out,” Winn related. “It’s very easy to pay somebody between $200 and $700; they will come to your job site, they’ll bring the drone, press the buttons, deliver you high-quality data. For other companies, they see this and they say, ‘I want to do this myself. I’m just going to buy a drone for the price of a laptop. I’m going to get a Part 107 [certificate] and do it myself.'”

Once it incorporates a drone operation in-house, a company typically needs a “drone champion” to motivate it to develop policies, safety practices and training. “There’s a vibrant market of drone professionals out there and delivering these services. In-house is smaller but growing very rapidly,” Winn said.

But unfettered integration of commercial drones into the airspace remains elusive. During a panel discussion at InterDrone, Gregory Walden, chief aviation counsel with the Small UAV Coalition, said federal law enforcement concern over rogue recreational drones has caused an “informal hold” on the promulgation of new rules such as allowing flights over people and beyond the pilot’s visual line of sight—rules considered essential for the commercial drone industry to grow.

Until such rules are released, the industry must pursue the waiver route. Also marking its first-year anniversary in August was CNN Air, the dedicated drone unit of cable news network CNN. The drone unit received two of the first waivers the FAA granted for operations over people; the first one was 358 pages long and weighed almost four pounds. “The drone that we were asking to operate over people weighed a third of the waiver request,” said Greg Agvent, CNN senior director of national news technology. “The waiver we were granted proved to be not very useful to us. But it’s a stepping stone; we learned from this process.”

An early adopter among news organizations, Atlanta-based CNN entered into a joint research initiative with Georgia Tech Research Institute in June 2014 to study media use of drones, an agreement that was later expanded to include cooperative research with the FAA. In May 2015, it agreed to participate in a “Pathfinder” program with the FAA to explore concepts for urban use of small unmanned aircraft.

“We put a lot of effort into this—a lot of money, a lot of research, a lot of really smart people that helped us to understand the possibilities of what we could do with drones,” said Agvent. “We’re flying at low altitude, we’re flying very lightweight craft and we’re flying line-of-sight. That’s the lowest hurdle for this industry, and we haven’t actually been able to achieve everything we wanted to.”

Some in the industry are cautioning against a rush to integration. Jesse Stepler, COO of the venture-funded “Drone as a Service” company Measure, which provides turnkey drone operations to the telecommunications, construction, energy and media sectors, questioned the proficiency of the commercial drone pilots the FAA is graduating.

“When it comes to Part 107 and beyond visual line of sight, I would have significant reservations about the current standards and an operator’s ability to fly safely,” Stepler said. “We’ve got a test that 60,000 people have passed—it’s a 92 percent pass rate. If we’re talking about operations beyond visual line of sight we’re going to have to introduce stricter standards in terms of who is allowed to do that.”