Disruptive Innovation: Drones


DroneYou can be sitting on a ledge enjoying the scenery when they come flying by you. Large, metal dragonflies which are delivering product or correspondence to someone miles away. Drones are an innovation that is beginning to catch the imagination of the marketplace more and more. Indeed, these little gizmos are flying delivery trucks for many companies.

It is not a science fiction movie at all. Major companies such as Microsoft, Amazon, and UPS are developing fleets of drones for the sake of business. Drones have already been used for several years in security and surveillance, but shipping is becoming a primary use. Another is an aerial inspection. Construction contractors and real estate agents both know the value of drones in their respective lines of work to assess property. The Federal Aviation Administration and the US Department of Transportation have made significant changes in the regulation of drones, so the commercial use is more convenient, and there will be more drones whirling through the air. A drone by its definition is either a UAV or the more common quadcopter and they are taking to the skies in rapidly increasing numbers. 

The story of drones is much like the story of any other disruptive innovation. The first UAV flew into combat in the Vietnam war but this was nothing like the units of today that are extremely small, stable and cheap. These drones were quite large and very expensive and would occasionally get shot down or just crash. By the late ’90s the technology had advanced quite a bit to see the development of the Predator Drone which was able to fly extremely long distances remotely piloted via satellite link. These proved helpful in the Gulf War and by 2001 the technology had advanced to the point that the drones could be outfitted with Hellfire missiles. Within a year the UAVs were cruising the skies of Afghanistan and engaging in combat all the while a pilot was controlling it from Nevada. The first decade of the new millennium saw an explosion in consumer electronics and even before consumer drones were available there were advances in first person view model airplanes. By the later part of the decade gyroscopes became common in model helicopters, making them very easy to control. As with all disruptive innovations if you walked into a store and bought a $60 drone the technology and cost of that would have been astronomical 15 years ago, perhaps hundreds of thousands of dollars to build.  In some cases, it may have been completely impossible to build as key innovations hadn’t been made yet.

The first appearance of consumer drones came in 2010, which led to interest from consumers and a slowly lowering of cost and entrance of other competitors. By 2012, prices had come down significantly and drones had started to demonstrate real business cases, the ability to remotely be flown longer distances and inspect power poles or the ability to provide an eye in the sky for emergency services. By 2013, even Amazon thought it seemed viable and started to devote real resources to building a drone delivery program. Fast forward to today and drones are everywhere. You can buy a stable remote controlled small drone for just $10. For $60, you can buy a well built drone that has auto-land, auto-takeoff, stabilization and streams live video to your iPhone. This extreme lowering of price while expansion of features is very typical of a new disruptive innovation (the first Microwave was huge and cost $11,000). If you were willing to put out several hundred dollars you can get a drone that has GPS and can completely return back to where it started, landing and always staying stable in altitude and location all at the push of a button, a feature even helicopters don’t have.


Brave New World

The figures suggest how drones are catching on. US drone sales were over $200,000,000 and growing at several hundred percent per year, a very common extreme adoption curve. Commercial drones are going to pick up in delivery revenue; the figures will go from $2.3 to $2.7 billion in the current year. Industries which can expect to do well include inspection/construction, agriculture, civil and local governments, insurance, and offshore oil and gas.

Accessing places that are off the beaten track can be a real advantage. Isolated stations can receive needed mechanical parts without requiring supply helicopter. Surveillance studies and inspections are not as troublesome because a drone can go where an individual is not able to tread. The drone comes in handy when farms of hundreds of acres need inspection.

Drones will result in new employment opportunities for many people. Companies have an interest in drone technology but are not always going to budget for a drone department. It makes greater sense to outsource to third parties. Outside consulting firms is where employment opportunities surface. It doesn’t take prohibitively long for anyone to learn how to operate a drone. Small companies with drone technicians can supply the services needed by other businesses. Drones offer a possibility of meaningful employment for a growing number of people. In fact there are already 20,000 registered commercial drones and this number is rapidly expanding. 

This sounds good for corporate management and investors and is also a significant benefit for the American consumer. Drones offer a service and convenience not known before. The buying public stands to gain considerably as drones take to the air with greater frequency.

  •    Selling A House Is Going to Be Easier

A real estate agent is going to recommend photographs of the interior of the property be available for buyer inspection. The challenge is the cost of a professional photographer to do the work. Moreover, still pictures will not adequately show the benefits of a large property of several acres or more. Aerial video can be shot from a helicopter, but it is expensive. Drones equipped with cameras reduce the price of photography substantially. Additionally, drones can be operated inside the house to do videos of the various rooms. The footage can be made available at the real estate agents office, making it easier for a buyer to inspect the house.

  •    Improved Security

Looking one more time at the subject of property, security is essential for any investment property such as apartment units. Drone security allows surveillance of angles not easily captured by a positioned camera. There is also the ability to survey a larger area with one camera.

  •    Quicker, Safer, Deliveries.

Amazon Prime Air is still being developed but once operational; this service will be able to deliver small packages within one half hour of an order placed. This is convenient all by itself, but there is another quality for the American public. Delivery by drone means the number of road accidents involving these delivery vehicles will go down. Fewer delivery trucks also mean less traffic congestion, something anyone driving in the late afternoon will appreciate.

  •    Better Road Maintenance.

There’s been a lot of talk about infrastructure these days, but checking on the safety of bridges and roads requires inspectors going out on site and actively assessing the situation. Drones offer an opportunity to have the same areas inspected in numerous angles from the air. The cameras also permit a closer look at the structures. Human error is eliminated as a fuller inspection can be performed.

  • For Fun

Drones can be a whole lot of fun to fly and are actually quite stable nowadays, rarely break and can seemingly do more and more with each new release. Here’s a look at a series of hundreds of drones being used to put on a light show.


A Gift with Mixed Blessings

Business is just beginning to appreciate the full potential of drones. No one is wrong for feeling a little bit giddy about the prospects, but these little gadgets come with a mixed blessing. Drones do an awful lot for various industries, but there are some overriding concerns. These happen to be challenges that any company using a drone must address and find practical solutions.

   Privacy Leads the List of Issues. Drones can photograph a closer distance than a helicopter or a Cessna airplane, but there may be an infringement on private property. Legislation in states such as Washington are defining the rights of a property owner to sue if a drone accidentally ventures onto private property.

   Limitations are Starting to be Placed on How Much a Drone May Carry. A total limit of drone plus package of 55 pounds is the norm. This is another effect on the delivery advantage. A commercial company can still deliver packages, but only up to a certain weight. It is possible that boutique shipments, articles that are not heavy equipment or sizable appliances, will be the primary use of drones.

   Operations. GPS technology is used to direct drones to their destinations. GPS by itself cannot limit the distance or the altitude of a drone. The possibility of accidents is quite real. A drone might be able to go hundreds of feet into the air, placing it in possible contact with smaller aircraft or helicopters. Distance travel has the drone flying blind. GPS is not able to indicate the surroundings, whether there are potential hazards, and if there is a risk of losing the packages.

   Environmental Issues. It may seem a bit odd to think of environmental issues. After all, the use of a drone as opposed to a helicopter is going to cut carbon mitt emissions in the air drastically. But there are concerns regarding the environment. Drones fly at lower altitudes and might fly into the path of migratory birds. Predators such as hawks or falcons may view the drone as prey and attack it, resulting in injury for the bird (and destruction for the drone). This possibility of contact with creatures in their habitat could get serious if there happened to be endangered species flying close by to the drone paths.

   Safety. Any flying contraption, no matter how small, can pose a safety risk. Drones used in forestry may constitute a hazard to any logger who is up in the trees. The descent of a drone ought to be easy, but if the systems collapsed suddenly, a drone weighing 30 pounds or more could fall on top of the operator. Safety procedures and accident prevention devices put into the drone itself may need to be further developed. There also issues of air safety, where drones have been reported many times near airports and a large enough drone perhaps could damage an engine or a vital part of a control surface. It should be noted however that this risk is generally a bit over inflated, most drone operators follow the rules and do not ascend to flight levels near airports. And while there are hundreds of thousands of drones out there, there are 300 billion birds, and they pose a much greater risk and still it’s rare to have a bird strike.  

   Regulations Will Require More Definition. Drones continue to be in a state of development and will so for some time to come. Rules need to be developed and defined to better address situations. Privacy is always going to be an issue. Most people are going to object to the possibility of an uninvited drone taking camera shots of personal property. Safety is going to be just as important. Means of preventing drone crashes must be addressed for the safety of operators and bystanders otherwise legislation will overreact before the market has a chance to really realize full potential. How high a commercial drone is permitted to fly is certainly going to be an issue discussed by regulators and the public. While commercial drones are being given the go-ahead for use, the coming months will probably not see fleets of these devices flying above your house. 

Drones Are Now Part of Business

Nevertheless, drone technology is now very much a part of the present  and they will be an integral part of the future. The commercial value of drones is not going to be ignored by anyone as the industry could grow by 1000% over the next decade. Perhaps the biggest beneficiaries of the use of drones will be small companies. These enterprises have had to deal with shipping costs that cannot limit the amount of service. Drone delivery will make it much easier to give customers what they want and, more importantly, precisely when they need it. Drones will make it easier to do photography, to do aerial mapping, tornado surveys, for agriculture surveys, to locate poachers, inspect roads & electric wires and to be used by media to broadcast live video. In market sectors, such as retail where profit margins are slim, drones may permit small operations to exist and expand.

Frankly, these kinds of discussions and questions are all part of how an emerging industry develops into a dominant performer in the marketplace. The potential drawbacks are not going to turn any company from taking full advantage of the benefits drones offer. Any new invention almost always crosses the chasm by allowing people to do something better, with businesses already employing the use of drones daily, the site of these small mechanical wonders is going to be increasingly less an oddity in the air. They have become a part of the American commercial landscape and will be so for many years to come. 


< back to blog