24 October 2016
Drones are expected to be used for a variety of commercial applications in the coming years. Photo: Reuters
Drones are expected to be used for a variety of commercial applications in the coming years. Photo: Reuters

Commercial drone market set to gather speed

Unmanned Aerial Vehicles (UAVs) have become increasingly popular. In December last year, the US Federal Aviation Administration (FAA) required owners of small unmanned aircraft systems (UAS) to register online. Within just one month, nearly 300,000 UAS owners filed for registrations.

However, the FAA estimates that sales of UAS reached one million units over the Thanksgiving and Christmas holiday season. That means that there were at least 700,000 UAS owners who were yet to register.

You can find UAS products available on Amazon, in prices ranging from a few dozen dollars to over US$1,000.

Shenzhen-based DJI Technology Co. is definitely a world leader in drone cameras. The world’s largest maker of consumer drones has transformed the drone into easy-to-use devices for ordinary consumers.

In the past, UAVs were only used in the niche market, such as the military. But DJI has developed the segment into a consumer market, according to the founder of a Shanghai-based parts supplier of drones.

DJI was founded by Frank Wang, a graduate of the Hong Kong University of Science and Technology in 2006. The company has made the once expensive and hard-to-control drones become more affordable by cutting the price to below US$1,000, rendering them affordable for most consumers.

Its flying and camera stabilization systems redefine camera placement and motion. Amazing photos and videos of valleys and volcano have been widely shared on social network platforms like Facebook and YouTube. DJI has received a flood of orders.

Celebrities including Steve Wozniak, a co-founder of Apple, and Bill Gates, are all big fans of drones. News such as a drone crash in the White House and the use of a drone in a marriage proposal to famous Chinese actress Zhang Ziyi have also brought drones into popular conversation.

DJI is estimated to have reaped sales of US$1 billion last year. It has snapped up 50 percent of the US and European markets, while French rival Parrot and American firm 3D Robotics take up 10-20 percent and 5-10 percent respectively.

DJI raised money in mid-2015 with a US$8 billion valuation. Accel Partners, which invested in high-growth companies such as Facebook and Dropbox, invested US$75.5 million in the Chinese firm.

The Shenzhen-based entity has achieved success in the consumer drone market, but it’s widely believed that the professional market has more market potential.

UAVs can be used in agriculture to spray pesticides, for surveying and mapping, or to even deliver packages.

Currently, the professional drone market remains highly fragmented, with various companies trying to tap into the market.

The global drone market could be worth nearly US$5 billion in 2017, against US$1.5 billion last year, according to Goldman Sachs. Professional drone market will by then account for half of the market share compared with one-third in 2015.

Platform is another key aspect in the industry. DJI follows the model of Apple in making hardware and software on its own. In contrast, 3D Robotics has established, the world’s largest open platform for drone users.

The open platform has been supported by Intel, Linux and Qualcomm Inc. 

Meanwhile, DJI is also on the move. The company has released a software development toolkit in late 2014. That would enable third parties to develop other applications on its drone devices.

This article appeared in the Hong Kong Economic Journal on Feb. 16.

Translation by Julie Zhu

[Chinese version 中文版]

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