Ripples in the drone industry wave?

I recently commented on an excellent post by @Paul Luen, which was highlighting an apparent looming 'chasm of disillusionment' caused by the disparity between reality and the 'pie in the sky' predictions being released by analysts regarding the growth of the air drone industry. My comment to Paul's post spawned a flurry of direct enquiries with further questions so I thought it may be useful to put my thinking into an article...

Health Warning - this is just my thinking, not an analysts prediction...

As the world's leading drone consultancy and largest industry cluster, Drone Major Group is in the fortunate position of having a practical insight into the issues being faced by businesses trying to stay on the drone industry wave as it twists and turns underneath them.

This article explores whether a chasm is actually looming or if we are simply experiencing the effects of surfing treacherous seas...

So why is it so turbulent?

It is not surprising that an industry which has exploded into existence and is expanding more rapidly than any before it is somewhat turbulent and difficult to navigate. In 2016 & 2017, sales of recreational drones seemed to be on an unstoppable rise and many manufacturers popped on to the market making a plethora of models aimed at, what analysts forecasted as a booming industry and others labelled a fad. The logic of those who subscribe to the 'Fad' theory is that, as the space in cupboards and under beds fill up with rarely used recreational drones, so demand will reduce and sales subside. Some analysts naturally confused rising recreational drone sales with an industry boom which generally only occurs as a result of a fundamental shift in commercial industries which bring long term benefits and utility. Selfie drones simply can't have that impact!

The commercial sector, hampered by bad press and slow to arrive regulations, is now starting to accelerate and the future looks fantastic...but what shape will that future take and will it accelerate again or stabilise? The shape of the future air drone industry is extremely difficult to predict and even the most drone savvy analysts can only put a 'wet finger in the air' figure on it so far away as to be irrelevant to todays businesses.

We have already seen several major shifts in the industry which seem to have caught many (including large manufacturers) off-guard. The downturn in recreational drone sales was extremely acute in 2018 with some manufacturers seeing a significant fall in sales. Couple this with a definite shift towards corporates bringing operations in-house and we have seen a shift in demand for third party operators in sectors such as oil & gas and construction. This, of course will be further compounded in the future by the rise of autonomous systems which, when regulation allows, will dominate operations in most sectors.

'Chasm of Disenchantment' or 'Mountain of Opportunity'?

All of this does not signal a downturn in the industry at all. Actually, quite the reverse is true as manufacturers see a significant rise in demand for commercial systems and there has actually been an increase in operator training requests driven by corporate demand. The problem is that all of this change is happening at a rate that businesses find difficult to deal with and none of it can be relied upon to be there next year.

Let's look at a fictitious case study to elaborate on this...

...at the initial rise of the sUAS industry , Company X sets up an operations business to serve off shore energy companies. All is going well but as time went by, into an easily entered and non-protectable market come a stream of businesses offering lower and lower rates so business starts to slow as competition starts to bite. This is compounded by the slow rate of take up of the technology by other industries who are worried about the lack of regulations and standards and compounded by a shift by energy companies to running operations in-house which creates a bottleneck in demand. Like a flash, Company X moves into training...oops! Low barrier to entry and low margins, OK what about software?...High costs, low barrier to entry and massive competition from countries like Israel...OK, what about Consultancy? A slow death follows as that honey pot has extremely steep sides and takes years and years to build. They surfed a great wave but, eventually, it became too turbulent and too crowded to navigate successfully.

So, with all the hype and broken dreams, how do you create a lasting business in the fastest but rapidly shifting industry? It's a tough one and not for the faint of heart but here are just a few simple suggestions...

I do not believe that the future of the air drone industry is in small, multi rotor drones delivering individual parcels, pizzas or bottles of beer everywhere...this is just too complex and relies on changes to infrastructure which will not happen on a wide enough scale to make this a viable industry for the many...so I would couch businesses looking at this industry to focus on applications with far reaching, achievable and sustainable utility...think #BIG, think #DRONESFORGOOD!

The world faces many acute problems as populations rise, energy demands rise, pollution rises and the traffic on our roads rises...So many problems to solve but which to choose? The most successful companies are not necessarily those who break the mould but those that follow and do it better so I urge you to engage with the industry, do your research and find a vector in which enables you to be innovative, disruptive and better than the rest then enter boldly and be ready to invest in the right communication strategy to achieve your aims...#INNOVATE, #IMPROVE, #DAZZLE

If you are going to be an operator business, look where that is going. Many operator roles will inevitably shift to system managers monitoring many systems not remotely piloting one but there will always be a role for the specialised pilot/operator. A simple example of this is photography...you can't automate art so this is an area where there will always (at least for the foreseeable) be a need for a talented photographer/pilot. Generalising in any industry is a risky approach and the drone industry is no different. Pick your niche carefully, make it clear what you do and why and then deliver it with every ounce of passion you can muster..#THINK, #FOCUS, #DELIVER

The applications for drone technology (across all environments) continues to grow alongside the understanding of just how much value this technology can bring to a wide range of business sectors so you are definitely in the right industry but get ready for a long and bumpy ride and make sure that you have good backing from investors that believe in the long haul...#INVESTTOSURVIVE

In an industry with inherently low barriers to entry, you may find that you are quickly surrounded by competition. In this situation, you have several options, fight, run or find the strongest competitor and make friends with them. Collaboration is essential in any industry but I believe that we need almost a family approach to this one. We are heading into unknown waters with a raft and a stick to paddle with but if we strap rafts together, we are more likely to survive the storm...#BUDDYUP!

Lastly remember that whatever you do, you are not doing it for you but for your clients. Your clients want better value and better utility year on year and will have no loyalty to you if you lose sight of that. We are human and we all, without exception, want to know...#WHATSINIT4ME?

There is no doubt that the industry, as a whole, is flourishing and I personally have a very positive but cautious outlook. Things will continue to shift rapidly as pure air moves to multi-modal, RPAS loses to autonomous and trends evolve from small scale delivery to large scale changes in our transport systems. 

The question is, can you move fast enough to stay on the rising wave or are you still surfing on ripples?

For all budding startups and young businesses, the #DRONEACCELERATOR (www.suas-global.com) has established to provide you with everything you need and a nice boost to your business. It's free to join and full of other innovative geeky entrepreneurs just like you!