Taking flight | The Economist

Today’s drones are mostly flying cameras. They are already being put to a wide range of business uses

PHOENIX DRONE SERVICES, operating from a business park on the outskirts of Phoenix, Arizona, is typical of the small firms that have sprung up in recent years to pursue the commercial opportunities around drones. Its founders, Mark Yori and Brian Deatherage, started off by building radio-controlled planes. To stream live video, they modified a baby monitor and attached its camera to a fixed-wing drone. These were the days of “crash, smash, rebuild and try again”, Mr Deatherage recalls. Then in 2011 they used a drone-mounted smartphone to take some pictures, for which they were paid $200. “That’s a business,” Mr Yori concluded, and their company was born, one of the first permitted to operate drones commercially under a “section 333 exemption” granted by the Federal Aviation Administration.

In the company’s offices, fixed-wing and multirotor drones of various shapes and sizes hang on the walls like hunting trophies. A technician surrounded by tools and components tends to a half-built drone in a workshop area; a black DJI hexacopter sits on a table, poised like some giant insect. For years Mr Deatherage and Mr Yori built their own drones, and still use custom-built aircraft for some types of work. “In the beginning you had to be able to build and repair your own aircraft,” says Mr Deatherage, who has a computing degree and taught himself how to use the various tools to process the data from his drones.

Mr Yori likens the fast-moving drone business to surfing: “You always have to be ready to catch the next wave,” he says. There have already been several waves of enthusiasm for drones, as various industries have woken up to their potential and small firms have rushed to meet their needs. The introduction of the “part 107” rules in America last year has removed the previously formidable barrier to entry for commercial-drone operators. The industry is now looking for the most promising applications and trying to gauge how the market will evolve.

The first commercial use of drones (and still their main use for consumers) was to act as flying cameras. Over the past 150 years cameras have changed shape from bulky wood-and-brass contraptions to handheld devices and then smartphones. In many ways drones are the logical next step in their evolution. It is telling that GoPro, a company known for its indestructible action cameras, recently launched its first drone; and that DJI, the dominant maker of consumer drones, has acquired a majority stake in Hasselblad, an iconic Swedish camera firm. Using drones for photography is much cheaper than using manned helicopters. Aerial shots have proliferated on television in recent years, and are also popular with property agents and for dramatic wedding videos.

Eye in the sky

Paul Xu of DJI lists photography as one of five areas of opportunity for commercial drones, along with agriculture, construction, inspection, and public safety and other civil-government uses. Once you have a flying camera, there are lots of things you can do with it. Agriculture, and measuring the health of crops in particular, was identified early on as a promising market for commercial drones. Crop health can be assessed by taking pictures using special multispectral cameras which “see” more than the human eye. By measuring the relative intensity of colour in particular frequency bands, they can identify undernourished or diseased crops. This can be done by satellite, or by sending people into fields with clipboards, but drones can do it more cheaply. A GPS-equipped tractor can then precisely spray water, fertiliser or pesticides only where needed, increasing yields and reducing chemical run-off.

In a report published in 2013 the Association for Unmanned Vehicle Systems International (AUVSI), an industry body, identified precision agriculture as by far the most promising market for commercial drones. But enthusiasm for drones in agriculture has cooled lately. In part, that is because at the time of the AUVSI report most civilian drones were of the fixed-wing variety, ideally suited to flying over large areas; the rapid progress made since then by multirotor drones, which have a shorter range but can hover, opened up other markets that are now seen as more promising.

Encouraging farmers to adopt drones also proved harder than expected, notes Chris Anderson of 3D Robotics. The agricultural use of drones sounds good in theory—feed the world, save the planet—but is difficult in practice. The market is very fragmented and conservative, with many subsidies and distortions, and some of the social goods that flow from using drones, such as reducing run-off of chemicals, do not benefit farmers directly. The agricultural market “is littered with struggling technology companies that have tried to break in”, says Jonathan Downey of Airware.

Mr Anderson believes that the most immediate opportunity lies in construction and related industries. Most big construction projects go way over budget and end in a lawsuit, he says. Mistakes made early on in a project may not be noticed until much later, and cost time and money to rectify. Buildings are designed in a flawless digital environment but must be constructed in the much messier real world. “It’s all an information problem,” says Mr Anderson. So the industry has been pursuing the idea of “reality capture”, using technology to measure buildings precisely during construction and track the use of raw materials on site to ensure that everything is going according to plan. Drones are ideally suited to the task. Thousands of aerial photographs are crunched into a 3D site model, accurate to within a few centimetres, called a “point cloud”, which can be compared with the digital model of the building. And safety worries that hamper the use of drones in other fields are kept to a minimum because construction sites are closed areas, workers wear hard hats, and drones fly within line of sight.

Andrew Kahler of John Deere, a maker of agricultural and construction machinery, explains how drones can also streamline the process of grading—preparing the ground for constructing a building, road or railway. This involves measuring the original topography, which by conventional methods might take several weeks for a large site; using bulldozers and other equipment to move large quantities of earth; then “fine grading” the site to within an inch or two of the desired final shape. The great benefit of drones, says Mr Kahler, is that they can carry out a topographic survey in half an hour, and the 3D model is ready the next day. That makes it possible to resurvey the site frequently and make any necessary changes. Mr Kahler’s company recently struck a partnership with Kespry, a startup, to provide drones and related software and services.

Keep away from the cliff edge

Drones are also useful farther up the construction supply chain, in mining and aggregates, says George Mathew, Kespry’s boss. Working out how much material is sitting in a stockpile in a mine or quarry usually involves taking a few dozen measurements with manual surveying equipment and then calculating the volume. A drone can measure the volume of dozens of stockpiles in a single flight, taking thousands of measurements that are turned into an accurate point cloud within an hour. As well as being far quicker and more accurate, it is also much safer. Falling off stockpiles is one of the industry’s biggest occupational hazards. Using drones to survey quarries and building sites also means human surveyors do not need to venture close to dangerous sheer drops.

Such is the interest in drones, says Mr Kahler, that he is asked about them at every site he visits. Customers are “ready and willing to jump into this technology”, he says. Sarah Hodges of Autodesk, which makes software used to design and model buildings, notes that drones are making it possible to digitise the construction industry, which has been relatively slow to adopt new technology. With a complex building like a hospital, being able to check that plumbing, heating and electrical systems are being installed correctly “is really transforming—it’s eliminating a lot of errors”. In China, she says, drones are being flown over building sites at night (which current American rules forbid) to measure progress made during the previous day and ensure that everything is going precisely to plan. Autodesk and others are also starting to use virtual reality and augmented reality to overlay digital models with real-world views.

Drones are attracting interest in a related field, too: the inspection of buildings and other infrastructure, such as pipelines, wind turbines, electrical pylons, solar farms and offshore platforms. At the moment, inspecting a roof for storm damage or checking the state of an electrical pylon involves sending someone up a ladder, which can be dangerous. “We are working with a lot of power companies,” says Mr Xu of DJI. His company has developed the Matrice 200, a drone specially equipped for use in harsh environments by adding features like backup batteries and GPS systems, magnetic shielding and weatherproofing.

But for utilities and other large companies to make the most of drones, they need to be able to integrate them smoothly with their existing computer systems and workflows. A single drone flight can generate as much as 100 gigabytes of data, says Anil Nanduri of Intel. Airware, which is working with large insurance companies in Europe and America, has developed a system that handles the whole process. The insurance company specifies what data it wants, and in what format, and Airware’s software generates a suitable flight plan. This is sent to an operator who uploads it into the drone, which gathers the required data completely autonomously. The results are then sent back, converted into the form needed by the claims assessor and a summary is delivered into the insurance company’s systems. What makes the insurance industry particularly attractive, says Mr Downey of Airware, is that it is highly concentrated: “By working with the top ten players you can target a pretty big proportion of the market.”

Inspection by drone will get even better with further automation, says Mr Xu. Some dream of “drone in a box” systems, where drones sit charging in weatherproof boxes in remote areas, popping out when needed to gather data entirely autonomously. The use of machine-learning systems to identify anomalies could automate the process even further. Kespry, which is also targeting the inspection and insurance market, has built a machine-learning system that can count hail strikes on a roof. “It’s mind-blowing for people in property and casualty insurance,” says Mr Mathew.

After a flood or an earthquake, drones are already used in search-and-rescue operations to sweep large areas for people who need help. By enabling relief workers to see the bigger picture, they allow relief efforts to be co-ordinated more effectively. After flash floods in Chennai, India, in December 2015, for example, the police used drones to locate and rescue around 200 people. A trial carried out in 2016 by Donegal Mountain Rescue in Ireland found that a drone could sweep an area for a missing person more than five times faster than a ground-based team of rescuers. In February four skiers in British Columbia, who got lost and ended up in the dark, were spotted and rescued with the help of an infra-red camera mounted on a DJI Matrice drone.

For police use, drones are a cheaper and quieter alternative to helicopters for monitoring crowds and can be used to create detailed 3D models to help investigators of traffic accidents. Journalists and environmental groups are also experimenting with drone-based photography. Fixed-wing drones monitor animal populations and detect and deter poachers in Kenya, Namibia, South Africa, Tanzania, Zambia and Zimbabwe; multirotor drones keep an eye out for sharks off Australian beaches.

As drones expand into all these areas, what shape will the industry take? Some drone startups took a “vertical” approach, focusing on specific industries and creating integrated drone hardware, software and services for particular applications, as Kespry does in mining. Others, like Airware, bet that hardware from different makers would become standardised around a single drone operating system that would run on a wide range of designs from different vendors, just as Google’s Android operating system powers most of the world’s smartphones. Some companies focused on making specific components, such as sensors, complete drone airframes, or software tools to analyse data from drones.

For the moment the commercial drone industry does not look remotely like the smartphone industry; instead, it is a mirror image of it. DJI so dominates the hardware side that its on-board software has emerged as the industry’s main platform. The leading software platform for drones thus belongs to a single company and is tied to its own hardware; it is what the smartphone industry would look like if Apple’s market share were 80% rather than 20%. An equivalent of Android for drones does exist—a free, open-source platform called Dronecode, used by 3D Robotics, Yuneec, Intel, Parrot and others—but DJI’s platform is more widely used.

Once it became apparent that DJI’s hardware and software was emerging as the standard, many drone companies switched their focus to building enterprise-grade software and services for specific industries—an area that DJI seems happy to leave to others, given that some companies might prefer not to hand over their data to a Chinese company. For software providers the vertical model is winning, as startups target clients in particular industries.

Start here

But how, in practice, will companies adopt drones? Initially, they may choose to pay drone-services companies to work for them on a job-by-job basis. Matchmaking services like Measure, DroneBase, Fairfleet and Airstoc have already sprung up to connect companies that want to get a particular task done by drones with small firms and individuals who can do it for them. DJI has a stake in DroneBase, and some makers of drone software, including Airware and DroneDeploy, operate similar services. But this may just be an interim solution. “Companies usually want to start by hiring a service provider,” says Mr Downey, “and then they see how easy it is, and realise they can do it themselves.”

Drone companies, for their part, have been forming partnerships with incumbent suppliers, notably in the construction industry, which already have access to a large customer base. Hence partnerships have been formed (many of them underpinned by an equity stake) between Kespry and John Deere, 3D Robotics and Autodesk, Airware and Caterpillar, and Skycatch and Komatsu.

Mr Xu of DJI reckons that more needs to be done to promote growth in the industry over the next five to ten years, so his company is fostering insurance, repair and financing services for drones that corporate customers are likely to want. With full automation some years away, it is also encouraging the training of drone operators. “We are transforming this from a hobby to a profession,” says Mr Xu. So far DJI’s training schemes, launched in June 2016 and outsourced to third parties, are available only in China. Each month 500-600 people are certified for particular kinds of drone operation, such as photography, pesticide spraying or infrastructure inspection. The company is also trying to assist startups that act as “UAV systems integrators”, helping companies in particular industries integrate drones into their business.

Thus many overlapping models and initiatives are competing to shape the future of the drone business. Mr Downey thinks that consolidation over the next five years will leave a couple of dominant providers in each industry. But in essence, all the commercial applications being pursued today use drones to gather data. As the machines become more capable, they will start moving things around, which will give rise to a vast range of new uses.

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