Drone Domination

This past week I attended the launch of DJI’s latest drone – the Phantom 4. The technology they unveiled was incredible and, with every new product DJI releases, they widen their lead over any other competition in the market. You can read about the product here.

While the category is only a few years old, the drone business – or Unmanned Aerial Vehicle (UAV) or Quadcopter as many companies prefer to call them for obvious reasons –  has hundreds of companies selling products. Some are start-ups like Lily, which has raised tens of millions via venture funding and Kickstarter, and others are established companies like Qualcomm and Intel.

But yet, DJI has by many estimates over 70% global market share in consumer and professional camera drones. They have doubled their revenue every year supposedly hitting over $1 billion in 2015. They are also very profitable and really didn’t need the investments they received from Sequoia in 2014 and Accel in 2015.

In 2014, I spent some time with DJI over a six month period. I visited their offices in Shenzhen, spent time with the founder, worked with various senior executives, flew their drones and, in general, went deep into the industry and into DJI.

Here are three reasons why DJI dominates the drone industry now and will continue to do so for the foreseeable future.

1. Target market

When I bought my first DJI Phantom 2 drone in 2014, the box said “Your flying camera” and this was a clear nod to what market they were targeting. They aspired to be an imaging company specializing in capturing images on the move not just a robotics or quadcopter company. And indeed, DJI’s product line encompasses handheld gimbals (camera stabilizers), high quality cameras and leading edge editing software. DJI is the favored choice by both amateurs and professionals. 

If you think of yourself as an “on the move camera company” rather than a drone company, everything you do is seen through that broader lens. DJI’s vision for the market is grander and bolder than its competitors, allowing it to create products that others can’t match.

 2. Speed

Since 2013, DJI has been on pace to launch a new drone (which has many pieces: quadcopter, camera, gimbal, communication system, software, etc.) every year, with a significant update every six months. That is double the speed of Apple’s iPhone launches. Competitors just can’t keep up.

How do they do it? DJI culture is very hard charging and engineering driven. Most employees don’t go home during the week and sleep near the office. But most importantly, CEO Frank Wang has a multi-year plan for its products so there is absolute clarity of direction. That kind of purity of vision is what it takes to be an industry leader. It is what Mark Zuckerberg does.

 3. Technical superiority

Frank Wang and most of the early employees all came out of Hong Kong University of Science and Technology. They are not doing copycat technology even on the software side. They are truly innovating and creating something new. You can’t copy and be a leader.

So is DJI unstoppable? In terms of their products, probably yes. However they do have a weak point: branding. The best consumer product companies invoke passion and emotion (think Apple or GoPro). And many brands are a reflection of the products creator and a company founder (Steve Jobs and Nick Woodman in these cases). 

Frank Wang is a brilliant engineer but he does not know branding. He is a fast learner and understands his weak points but branding is not something easily learned. Because of sheer market dominance and superior technology, the DJI brand does have meaning today, though it is mainly a technical one. An added layer of emotional resonance would really make it a world-beater.

I do like their slogans, precisely because their awkwardness adds some personality: “The Future of Possible,” “Visionary Intelligence,” “Elevated Imagination.” But their branding needs to do much more.

I am enjoying watching DJI execute its business plan. The camera drone market faces regulatory and other hurdles, but there is really only one company to track as this completely new industry emerges: DJI.