Incorrect forecasts about the billions of dollars that the drone industry would be worth led some to rush to cash in on the industry, but Mike Blades is one of the experts that has always been focused on analysis rather than exuberance. Many have and continue to talk about "hockey stick growth" and "unlimited potential" with drone technology, but as you can see in his numerous reports, presentations and especially on Twitter, Mike is anxious to talk about reality as opposed to hype. That focus on reality will be highlighted in another report he's releasing at the beginning of next year.
In anticipation of this upcoming report, we caught up with him to briefly explore how things have changed and will continue to evolve for the drone industry in 2020. He talked through how things could further develop with previously identified areas of growth in the industry, what's driving the hype in the UAM space, what he's expecting to see play out in 2020 and much more.
Jeremiah Karpowicz: In 2018, you identified six clear areas of growth for the drone market as a whole. What can you say about the growth we've seen in any/all of these areas since then, and how do you see those opportunities changing or evolving in 2020?
Mike Blades: Let's run through each of them individually.
With drone repair and maintenance, users have definitely seen the need, so there's been growth, but it's been around Robotic Skies and Fortress UAV, who are the two key players. Robotic Skies is focused on enterprise drones, and Fortress UAV is more about consumer and prosumer drones. The growth there has been limited, but it's been what we expected.
So much of what's happened and will happen with data security comes out of DJI drones being banned and we're really not sure what's going to happen with that. That's part of the reason it's become more of a concern than an area of growth. I think we'll see more focus on questions of how we secure data from drones. We'll see more conversations about secure links and how all of that feeds into UTM ecosystems. Remote ID is part of that and we're seeing developments of this right now with news about WhiteFox's drone traffic management demo. It's like a license plate for drones but also encrypts that information as needed.
With AI and machine learning, that's still a huge area of growth, and we're just starting to see the potential there. There have been some misunderstandings around where AI is going to make a difference with drones, but more and more people are beginning to understand that these capabilities are about automation with both navigation and processing to take the human out of the loop. Doing so can reduce the costs of a given operation in a big way.
For indoor and exterior inspections, we're seeing the opportunities there increase rapidly, and there are several companies that are getting involved in interior inspections in a big way. Those are often warehouse and inventory solutions. Exterior inspections like the ones that are happening in oil & gas are making a big difference, and they're being adopted much quicker in that space. That's only expected to grow.
For safety and redundant systems, there's been recent news about the testing that Iris Automation is doing and they're not the only ones doing that work. That said, the opportunities there are getting blown out of proportion because they're getting tied into reports about the value of the UTM market, but I don't think any of that is based on reality or anything we're likely to see anytime soon. It's guessing and hearsay because no one knows how much anything is going to cost and they're still trying to put together the technical standards. Those standards include Remote ID because you need Remote ID before you can have UTM which will then enable BVLOS.
When we get to the concept of drone + services, we're talking about opportunities that aren't strictly about the technology. The opportunity is all about getting companies that are already providing services or already have an aviation department to understand how the subject matter experts (SMEs) they're already working with can bring drones into an established pipeline or workflow. Whether it's a 3rd party service or by creating their own in-house drone capability, this kind of complete offering allows the end-user to better establish how they can achieve an ROI. How quickly can that happen, and what do those numbers actually look like? You have to be able to speak the language of the C-level executives that make the decisions about whether to use those services or not.
All those areas are growing, and we'll see continued growth in different ways in each of them in 2020. Probably the biggest one is the exterior inspections though on account of the differences the technology has proven to make in that sector.
You touched on the growth with AI and machine learning, but we've been talking about the potential in that area for years now. Do you think products like the Skydio 2 will see that potential-filled in a real way?
I think there's been a lot of technologies that have enabled autonomous drone flying. There are plenty of companies doing things with drones that automate the processes, whether it's about navigation or data. It doesn't just have to be navigation with those sorts of capabilities. The navigation is obviously huge though, because then with the "drone in a box" solutions, you can have several boxes on a perimeter that all take off at a certain time to perform inspections, security duties, etc. I don't know that the viability of these solutions will "hockey stick " the market, but autonomous drones are going to lead to huge growth.
With the capabilities of the Skydio 2, you can get 4-5 drones working together on an inspection, which could see the time spent on that inspection majorly reduced, and of course, the human is already out of the loop at that point, so the costs are that much further reduced. Those operations can also process and integrate all of the information being captured. This type of automation for both data processing and navigation is going to become more widely used in 2020, and it's eventually going to be the expectation rather than the exception.
You’ve been rather outspoken on Twitter regarding the UAM hype train and mentioned that success in this area will require deep pockets. Do you think we’ll see a better understanding/embrace of reality in this area in 2020?
I think there are two realities when it comes to UAM. There's the reality for people who understand aviation and then there's the reality for people who want to get funding to be the first to market in this. The latter group is going to continue to the story that, "this is progressing" and we'll soon be able to "avoid traffic by riding a drone to work", but it's just not feasible.
I led a UAM session at a recent industry event and the people on the panel agreed that there's going to be a market and need, but it's going to be much further out than anyone wants to admit. It's going to be a "crawl, walk, run" situation and the biggest companies in that world realize it. That's why the Bell Nexus has a pilot's seat in it. It's also a hybrid-powered aircraft. We're a long way away from automated aircraft that have no pilot and are all-electric.
I think we'll see a better understanding of what's possible on the technological side, but I think we'll continue to see the people who are marketing the technology paint a picture of drones carrying people around, even though we're not there with the technology, with regulation, or with public acceptance.
Speaking of hype, it feels like operators and organizations have a more a realistic understanding of what sUAS actually can and can’t do for commercial operations. Have you seen a similar evolution of expectations? Do you envision that coming together in a bigger way in 2020?
Yes and yes.
I think we've seen an evolution of expectations and that goes hand in hand with more industries understanding what they can and can't do with drones. More industries are able to tell the story of what generates ROI and that's why you're seeing some industry-specific conferences like the Energy Drone Conference. But I also see more of that coming together at places like Commercial UAV Expo, because there's still a disconnect between being able to operate a drone for a certain application and creating a case study to show there's a specific ROI and then telling that story to the decision-makers at the other end. We've made progress there, but that and the slowness of regulatory advances to affect more integration of drones into the NAS are what's holding the market back.
Those things are happening in parallel, but at the same time, having these stories that define where the value can be will help push regulation, and there really is a lot that can be accomplished under Part 107 without an additional regulatory increase. Tom Walker has laid out where that value is today.
What were some of your biggest takeaways from the “Drone Visionaries” sessions that you moderated at the Commercial UAV Expo?
There was so much, but the one thing that jumped out to me was around what Amit Ganjoo from ANRA Technologies was talking about with how UTM developers are thinking ahead to not just UTM in the United States but how that's going to look globally and how we need to approach the problem globally, kind of like ICAO. We have FAA rules in the United States, but we also have to understand ICAO as manned aircraft pilots to fly internationally. Amit talked about how we're going to need to approach UTM in a similar way,and I think he's right. Developing these systems so that they're at least somewhat uniform with technical standards across the globe when you're talking about unmanned aircraft is critical. You don't want to have to create things to different standards to operate in different areas. That kills the market, especially if you're a platform maker. It's not going to be good for anyone if everyone has to use a different set of software because there are all these different rules.
It's kind of the same thing with preemption issues in between federal and state. If you start creating a patchwork of rules then it starts getting more expensive in every way.
So it was telling to see that before we even have UTM, some people are trying to work with partners to figure out how to solve the problem globally, and I think that's significant. It's not about how do we make the market work tomorrow, but how do we make the market work for the next 50-100 years.
If there’s one thing you’re hoping to see come together or take shape in the commercial drone industry in 2020, what would it be?
Honestly, I thought we'd see a lot more consolidation than we saw in 2019, so I think that's still coming in a big way. We saw some, but I expect that to accelerate, especially on the platform side. We're actually still seeing new platforms, even without the BVLOS rules that we probably won't see for another couple of years. So I think a lot of these companies are going to have trouble staying in business.
The enterprise platforms that have longer endurances or advanced autonomy are in a better position to avoid that because there's more potential for regional successes and for the most part they're filling a gap that DJI isn't filling, which is the long-endurance drones on the multirotor side. Those things have legs, especially if the ban continues.
I still see consolidation on the hardware and software side though, and a movement toward more full-stack solutions and data security. All of those things are going to take shape in 2020.
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