The Booming Business of Drones

Drones are everywhere. Less than a decade ago, the Pentagon had about fifty unmanned combat air vehicles (known as drones or UAV — unmanned aerial vehicles).

It is estimated that they currently have about seven thousand of them (and Congress asked for about $5 billion worth of more drones in 2012).

There's a scene in Showtime's hit television series, Homeland, where Nicholas Brody (the former prisoner of war and current United States congressman) is told by David Estes (the director of the CIA's Counterterrorism Center) that the use of drones in the war on terrorism has moved from forty unmanned combat air vehicles to nearly four thousand in no time at all. While that was a fictitious scene, it was the type of statement that would make anybody raise an eyebrow. What makes it all that more interesting, is that those fictional numbers aren't even close to the staggering reality of how many drones are in operation. And, that's just the work being done by the United States. The International Institute for Strategic Studies has identified fifty six different types of drones being used in over ten countries (and this data does not include places like China, Turkey and Russia).

Now, drones are moving from the battlefield to your neighborhood, and it's about to create a brand new industry right along with it.

According to the Federal Aviation Administration, the use of commercial drones in United States airspace could become official starting in 2015. As the New York Times wrote in a December 25 editorial: "The drone go-ahead, signed in February by President Obama in the F.A.A. reauthorization law, envisions a $5 billion-plus industry of camera drones being used for all sorts of purposes from real estate advertising to crop dusting to environmental monitoring and police work." But this is just the beginning — industry analysts predict the market to double in less than a decade.

The business and civilian adoption of military technology is nothing new; we had mass adoption of the wristwatch after World War I when soldiers began attaching their pocket watches to their wrists for more practical purposes. A lot of the work and innovation coming out of the Defense Advanced Research Projects Agency (DARPA) is created for military usage, but then becomes commercialized for business application (this includes computer networking and the first hypertext system, which was an early form of the graphical user interface). With so many products that begin as something specialized for the military and then turned over to us every day citizens, it's becoming apparent that drones are on the verge of something big.

So what could a drone-based business look like?

Chris Anderson is the former editor-in-chief at Wired along with being a three-time bestselling business book author (The Long Tail, Free and Makers). He recently left his post at Wired to work on his own passion project-(DIY Drones)-turned-startup (3D Robotics), which recently raised five million dollars in venture funding. He was thinking about drones being used commercially roughly half a decade before the FAA woke up to it. In a 2009 blog post, you can feel the nascent thinking about just how powerful a drone-based network could be for businesses in the not-too-distant future. Fred Smith, the founder of FedEx, then wanted drone usage in his business as quickly as possible. From the post:

"Unmanned cargo freighters have lots of advantages for FedEx: safer, cheaper, and much larger capacity. The ideal form is the 'blended wing.' That design doesn't make a clear a distinction between wings and body, so almost all the interior of both can be used for cargo. The result is that the price premium for air over sea would fall from 10x to 2X (with all the speed advantages of air)."


The post goes on: "the key thing is having NO people on board, not even as backup. A single person in the craft requires a completely different design, along with radically different economics and logistics. The efficiencies come with 100% robotic operation."
Today, years later, Anderson still doesn't think we're there, just yet. He's currently selling a $500 drone that is a small and light aircraft that is only usable in non-urbanized zones and must follow specific laws to not interfere with FAA authority (which includes carrying payloads and other uses that are currently illegal).

Will the rise of commercial drones — yet more automation — resultant loss of jobs? It's too early to tell, but it's important to remember that we will require a significant labor force to design, program, maintain and organize this type of business. Drone usage at the domestic work level is going to create a significant number of jobs where both the talent and title doesn't even exist today. Imagine the hybrid of aviation, logistics, technology, supply chain management and more that will be required to be an effective employee in the near-future for the drone industry. Will that amount of new labor be able to fully offset those who currently have jobs that can be replaced by drones? It depends on several unknown factors at this moment in time, but change is coming. Increasingly, the stuff we see in science fiction and comic books, becomes a business reality. Fast.

This isn't just about building a better FedEx. The fact remains, that with all of the privacy, legal, and FAA hurdles that will have to be overcome, this is the dawn of a new industry. As Anderson has already stated on countless occasions: the advanced technology that encapsulates a smartphone (GPS, accelerometers, gyroscopes and simple-to-use software and interfaces mixed with sophisticated and light hardware) means that cheap solutions to unmanned air vehicles are a certainty.

Once drones are being used in domestic settings beyond a few niche sectors and wealthy hobbyists — and citizens feel like their privacy is not being breached — it's not hard to imagine businesses and marketers coming up with new and inventive ways to use drones to better commercialize their businesses.

Currently, Geologists like Jan Grygar are using drones to take high-definition photographs, while Simon Jardine and his business, Eye In The Sky, are using drones to sell aerial photography. Interestingly, both Grygar and Jardine have also started companies to manufacture and sell drones to other businesses. "The analogy is closer to the PC coming after the mainframe," Anderson concedes. "Which is to say, that these are not the most powerful drones in the world, but they will be the cheapest and they will be the ones available to regular people. Fundamentally, those people are going to find new applications for the platform that the traditional industries never thought of."

Now, we're beginning to see uses for drones in agriculture, 3D modeling, security (like saving rhinos in South Africa), environmental analysis, news reporting, filming, human rights monitoring and more. Just imagine what will be as more venture capital, entrepreneurs, inventors and every day people start exploring the new business opportunities that drones will create.

I, for one, welcome our new drone overlords.


Source: By Mitch Joel, Bloomberg News – 4 January 2013

Photo: The Advanced Research Projects Agency (DARPA)


(4.01.2013)