The Death of Airware & What It Means For The Drone Industry
Note: Everything stated in this article is of my own opinion and does not reflect the views or opinions of anyone or any other entity.
On Friday, September 14th, Airware informed it's employees and its customers that it will cease operations, after raising more than $118 million over the past few years from top investors like Google Ventures, Andreessen Horowitz, Kleiner Perkins, and Statefarm, to name a few. Last Friday, TechCrunch initially broke the news of the shutdown with a screenshot of a Slack conversation where the news was first discussed.
The startup was founded by Jonathan Downey back in 2011 with the intention of making aerial data collection easy and efficient. Since 2011, Airware has pivoted from making their own operating system, to building their own hardware, switching to cloud based enterprise software, and finally adopting DJI hardware. Pivoting can get very expensive the longer a company waits, and in this case, Airware pivoted too late to save the sinking ship.
Back in January of 2018, I predicted that 2018 will be the year of consolidations in the industry. While Airware was surprising to most in the industry for being "too big to fail", it does show that the drone industry has reached Stage 2 of the consolidation curve, Scale.
CONSOLIDATIONS WILL CONTINUE
As a precursor, my heart and thoughts go out to all of those that have poured their blood sweat and tears into Airware for the past decade. It's truly impressive what they've achieved and will be a detriment to the industry and for investments in the space in the next two years.
Investors will use the fall of Airware as a word of caution for anyone looking to invest in the space, and could restrict new innovations in the drone industry. But in the long term, every maturing industry arrives at this point in the consolidation curve. As the industry begins to scale, you'll begin to see numerous players, merge, consolidate, or disappear. During this stage for the drone industry, the remaining companies will need to emphasize their core capabilities, focus on profitability, and shore up their weaknesses.
COMPANIES WILL BEGIN TO FOCUS THEIR EFFORTS
The remaining companies will be spending the next year filling in gaps and owning their strengths to leave no room for doubt as to their capabilities. We will begin to see Propeller put a larger focus in establishing their presence in the construction industry. Kespry will double down on their enterprise mining capabilities. PrecisionHawk will continue to acquire and consolidate to accelerate their growth. And DroneDeploy will focus on growing their horizontal platform to enable new partnerships and integrations.
THE INDUSTRY WILL CONTINUE TO GROW
Airware will be the first of many consolidations within the next year. Many companies in the drone space have needed to restructure, adjust their monetization strategies, and change their core product offerings. We may see 2-3 more acquisitions or closures within the next few months from the companies that have struggled to generate profits or have pivoted too little too late.
While we're far from equilibrium, we can see cloud processing software and third-party integrations really driving the growth amongst the remaining drone companies. These innovations are connecting hardware, cloud processing software, and traditional project management software to allow people to automate their entire workflows. This new way of automation utilizing machine learning and artificial intelligence will drive the drone industry into the next generation of aerial analytics.
Following these consolidations, we will begin to see these top players focus less on competitive advantage, and focus more efforts in driving truly innovative products. The drone industry is still alive and strong, and I only expect the industry to continue to grow and exceed customer's expectations.
Software Engineer at Loft Orbital
6 年Great analysis, but that is too much focused on the US players, which are behind Europeans (cf. Pix4D) for Data analytics, not mentioning Chinese players for the hardware (the battle is lost).
GenAI Consultant and Start-up Advisor; Former Fortune 500 Executive; Co-Founder; Angel Investor
6 年This industry is in transition and naturally there will be 'loss leaders'. It's a common paradigm. Competing in the B2C and prosumer space is very hard with very limited margins. As always, my friend Jay is absolutely right :-). Start with '..companies with biggest pockets', focus on the enterprise space, look at drones as simply a very versatile data collection platform (nothing more, nothing less), focus on processing and analyzing data, derive business insights. Then attempt to integrate the results into mainstream business processes. Point clouds, ray clouds, etc. are not end points and should not be looked at as results (although a digital 3D oil rig or cell tower looks really COOL), but rather starting points.....to generate business results, business intelligence and business decisions. That way the industry can reach the right target audience, namely folks in charge of operations, inventory management, EHS, asset management, etc. My wish is that all the great success stories out there start mention ROI metrics, cost savings, etc. in their narrative. Something I am mostly missing today.
Engineering Leader | Software Engineer | Startup Founder | Advisor
6 年I was shocked when they adopted DJI since when I was there in 2014 there was a big focus on custom hardware. They were positioning themselves to be a better and more reliable Pixhawk, at a time when 3DR was having problems with fly-aways (and mostly a hobbyist/DIY company, pre-solo days). DJI was viewed as a "cheap Chinese" competitor and irrelevant to the needs of the enterprise. In those days I was flying mostly Naza builds (naza-m had just come out), so I already knew that DJI was no joke and their flight controllers were high quality. It should come as no shock that DJI founder?Frank Wang has been in the R/C world for years and is a true nerd, you can tell from forum posts he was on a quest for perfection. Part of me wonders if Airware's abandonment of hardware had anything to do with?John Doerr, who was an investor and even came to speak about OKR's at a lunch and learn one day. Maybe he took his drone project to Intel? They even have their own drone cloud now, called the "Intel Insight Platform" (https://www.intel.com/content/www/us/en/drones/solutions/intel-insight-platform.html). I've been trying to get a demo or access to it or something...Hilarious!
Add misleading job title here.
6 年It won't be consolidation, it will be collapse already the rumor mill has two more VC funded companies with necks on the chopping block. Who in the industry said Airware was too big to fail? I thought we all said what on earth do they sell.