What really happened to Drones in 2017? Where is the drones market really heading?
Drones will be everywhere soon:
- Drone service companies will be using them to deliver products and inspect roads, railways and even underwater.
- Flying taxis will transport people rapidly over dense traffic-ridden cities.
- Hobbyists will use them to capture amazing, never before seen videography.
- Rescue workers will use them to save lives by flying medicine and blood into remote locations.
- Lifeguards will use them to rescue swimmers.
- Farmers will use drone services to optimize their farm yields through better imagery and precise spraying.
- Creepy neighbors will use them to invade your privacy.
- Governments will use them to keep track of you and even target assassinations.
- Terrorists will use them in swarms to deliver lethal strikes to infrastructure and much more sophisticated militaries.
Yes, drones are a fascinating technology with lots of potential for good as well as bad. If you are following the latest news in drones, you might be tempted to believe this a very large and hyper-growth industry. Maybe you are an entrepreneur and bought into the hyper-growth story. Maybe you went out and invested in building a drone service business, and are now struggling to find any profitable business. Or you might be an end user who has bought into the potential and are looking to build a fleet of drones and assemble all of the eco-system required to have a fully functional unmanned aerial system (UAS). Perhaps you have discovered that several of the firms you are seeking to do business with are small start-ups with more of a vision than real capabilities. The ugly truth is that the Commercial Drone Market, in reality, is very different than the hype.
So what is really going on in the Drones Market?
Would be nice if there were some real facts to deal with. Right? Fortunately, there are, and we are going to give them to you. First, a note about where the data came from and why this is the best set of facts we have about the drone market today. The FAA in the United States passed a rule on December 21, 2015 (https://www.faa.gov/news/updates/?newsId=84386 ) requiring that all drones (weights more than 0.55lb and below 55 pounds) be registered before they are flown. In 2017 a sour decision overturned that rule and registrations lapsed until it was reinstated by the National Defense Authorization Act passed in December 2017. The law requires all registrants to follow specific rules about flight operations and limited to three basic flight groupings: A hobbyist, non-hobbyist (or professional) and non-hobbyist with special exemptions. Hobbyists were allowed to fly under a special rule, put in place to allow to allow remote controlled aircraft operations, and were required to register by name and location. Hobbyists were not required to identify the model aircraft or if they had multiple drones in use. The data is therefore limited to how many registrants are flying drones by code, state and country (yes the FAA database includes some registrants from outside the USA).
Professionals are allowed to fly commercial drones under a special rule which governs how, where and when they can fly. In some cases, they can apply for an exemption to allow them to fly commercial drones outside of the standard rules, for example, the exemption allowing CNN to fly over crowds of people (not allowed by the standard rule). In addition to the above information provided by hobbyists, professionals were required to register each of their commercial drones and identify the model being used.
In June 2016 the FAA released their first database of registrants, and again in October 2017. In January 2018, the DOT put out a press release with summary data on registrations and hopefully will release a more current copy of the detailed database. The data released by the FAA gives us the most accurate data available about where the hobbyists who are flying are registered. Yes, there may be owners of drones who are not registered, but these numbers are assumed to be small since there is no cost to registering as a hobbyist and the fines can be hefty for violating the law. And, yes, a hobbyist might be flying more than one drone, but again we estimate this to be a relatively low occurrence since drone flying is a hobby which can be done one at a time.
The data also gives us the most accurate insight about the makes and models of commercial drones used by professionals and where they were registered. For safety data, that is the occurrences of near misses, the FAA receives and records reports of sightings near airports or commercial aircraft which are compiled and made available publicly in a quarterly release. The data we are using from the FAA has a very small number of international commercial drones included. The reality is that we have not found another agency anywhere else in the world with similar public disclosure of drone data. And, few of the companies involved provide any data about sales. So we are unable to get a complete fact-based picture of the global drone market.
We have reviewed many estimates and forecasts, all of which we have found to be based on a questionable analytic fact base and underpinning. So, while this data does not include the international picture, the USA drone market is believed to be the largest and dominant drone market currently. So we present what we believe to be the most accurate data about what’s happening in the drone market based on the FAA data.
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So what does the data on the drone market tell us?
How big is the Drone Market, and what have been the recent growth trends?
As of January 10, 2018, there were over 1 Million total registrations of drones in the USA. The 1,000,000 total registration figure includes 878,000 hobbyists, who receive one identification number for all the drones they own, and 122,000 commercial, public and other drones, which are individually registered. FAA Press release – https://www.transportation.gov/briefing-room/faa-drone-registry-tops-onemillion As of May 12, 2016, the FAA showed Hobbyist registrations at 461,420 and commercial, public and other drones (professional) at 8,416. By October 31, 2017, the numbers had risen to 836,796 hobbyists (823,036 of whom were in the USA) and 106,739 professional models (105,738 of whom were in the USA). The growth rates for each respective category of drones registered has been as follows: Key Takeaways on Drone Market Size: Hobbyist drones appeared to have had a dramatic early growth, but the 4.9% over the holiday season represents a tepid expansion. As with all expensive personal consumer product categories, consumer drones appears to be showing the tendency to start fast and slow rapidly. Professional drone registrations have been very hot, however, that is from a very low base in 2016 of only 8,416 drones. The 14.3% growth for the two months from October to date would still represent a hot 80%+ annual growth of the drone market.
Which drone manufacturers are having the most success in selling drones in the current drone market?
As of October 2017, more than 50 manufacturers Drones had been registered by professionals. In terms of units sold, DJI was by far the overwhelming drone market leader, manufacturing over 70% of all professional drones registered. Though not represented in the hobbyist data, anecdotal evidence suggests the same is true for hobbyist drones where many retailers indicate DJI are equally dominant. Intel has been a relatively late comer to this party but is already number 2, passing up long time competitor 3D Robotics at number 3. Yuneec and Parrot have been early entrants and they round out the top 5. It should be noted that several players lower down in the list might be ranked higher if the rankings were based on revenue dollar value rather than the number of units sold. Companies such as Lockheed Martin produce niche drones with significantly higher selling prices than DJI and the rest of the top 5 in the drone market. However, while some analysts have attempted to estimate revenues, actual sales revenue is not readily available in any fact-based database. Regardless of the limitations in available data, DJI is the undisputed drone market leader in consumer drones used by hobbyists and professionals.
How many drone hobbyists and drone professionals are flying today?
As of January 10, 2018, the Department of Transportation (FAA) tells u there were 878,000 hobbyists registered drone pilots. We estimate the professional count to be approximately 100,000, but it is an estimate! The FAA only made public the number of professional drone registrations and not the number of professional pilots. One fact base would be the number of applicants who have taken and passed the FAA remote pilot certification. However, this would only be a partial picture as drones can be flown commercially by certified pilots or someone under their supervision. We do know many professional firms that have multiple drones, but they also have multiple pilots, some of whom may have registered as a hobbyist for their personal drones, some of whom are certified, and yet others flying under certified supervision. All of which makes it extremely difficult to pin down the exact number of professional drone pilots. Based on our discussions with drone service companies and other drone market experts, our best estimate is that the number of professional drone flyers in the USA is near 100,000.
What are the drone professionals flying?
The vast majority of professionals are flying DJI drones. In fact, as mentioned before, more than 70% of the professional drones registered were manufactured by DJI, and 8 of the top 10 drone models are made by DJI. For more details of drones registered for flight by professionals see below a list of the top 50 models registered with the FAA as of October 31, 2017.
Key Takeaways on Drone Models used by Professionals:
The DJI Mavic is the most used professional drone model because of its versatility and reasonable price point. It can produce reasonably good images and video and is used primarily for capturing imagery. However, in terms of drone model family, the Phantom series are dominant with individual models occupying 5 of the top 10 spots. Especially, the DJI Phantom 4 and Phantom 3 along with their Pro versions are dominant models used by professionals. The only non DJI models that occupy the top ten spots are the Intel Shooting Star 2 and the 3D Robotics Solo at numbers 6 and 8.
How many drones are there in each state?
Key Takeaways on Drone Registrations by State:
California represents almost 14% of the drone registrations and leads Texas by more than 50 thousand. With Over 100,000 Hobbyists and more than 20,000 Professionals, California is the leader by every count. Rounding out the top 5 are Texas, Florida, New York, and Pennsylvania, although Pennsylvania gets that ranking due to its hobbyists. On the professional side, North Carolina is ranked number 5 and Pennsylvania much lower at number 9. The states or territories with the lowest number of drone registrations are North Dakota, Delaware, Vermont, Wyoming and District of Columbia at the bottom of the list.
Which states have a high penetration of drones? Low penetration?
Key Takeaways on Drone Penetration by State:
In the United States, there are 287 drone registrations per million population consisting of 254 hobbyists and 33 professionals. This penetration rate is a relatively low number among modern-day technologies, indicating lots of room available to grow. Virginia is the most penetrated state for Drone registrations ranking number one in both Hobbyist and Professional registrations per million residents. Its penetration rate, at almost 4200 registrations per million, is almost 14 times higher than the average nationwide. Rounding out the top 5 overall are New York, New Jersey, Alabama, and Massachusetts. This is also their ranking for hobbyists registrations. They all show drone penetration rates multiple times higher than the nationwide average. Professional registrations did show some variations in ranking, with Alabama at number 2, New York at number 3, Nevada at number 4 and Massachusetts at number 5. New Jersey is ranked number 6 in professional penetration. The bottom 5 drone penetrated states are Maine, Nebraska, New Mexico, Vermont, and North Dakota. Their penetration rate is more than 80% below the nationwide average.
Which states have the highest and lowest numbers of drone incidents reported?
In the period from May 1, 2016, to May 9, 2017, the FAA recorded 2,092 incidents where drones intruded in commercial airspace or were spotted flying dangerously close to commercial aircraft.
Key Takeaways on Drone Incidents by State:
California is the leader in drone incidents reported with almost 18% of the total recorded. Rounding out the top five are Florida, New York, Texas, and New Jersey. Collectively they accounted for almost 52% of the incidents reported. California, Florida, New York and Texas were all states among the top 5 in numbers of drone registrations, suggesting that there is some correlation between the number of registrations and incidents. The states with the lowest number of incidents reported were North Dakota, Nebraska, West Virginia Delaware, and Wyoming at the bottom. In fact, there were no incidents reported in Wyoming, the only state with that flawless drone flying record during the period.
Which states have the safest/unsafest drone flyers?
In the United States and territories, there were 2.25 incidents reported for every thousand drone registrations overall. The number is slightly higher when considering hobbyist registrations only, which we think is the most appropriate measure given that the professionals are certified, well versed in the rules and limitations and are significantly more vested in avoiding a commercial aviation incident. There just is too much at stake for professionals.
Key takeaways on state-level drone safety:
The safest drone flyers are in Wyoming with no incidents reported during the period. Second safest was Iowa where the incident rates were 90% lower than the nationwide average. Third, fourth and fifth were Nebraska, Delaware and Indiana, all showing incident rates dramatically lower (at least 80% ) than the average nationwide. The least-safe state/territory for drone incidents is the District of Columbia with a whopping near 48 incidents reported per thousand hobbyist drone registrants. This is almost 25 times higher than the nationwide average. No other state or territory demonstrated such an outrageously high number of incidents in relation to people registered to fly drones. Puerto Rico, New York, Hawaii, and Nevada round out the top 5 and all showed elevated levels of incidents in relation to the number of hobbyists (or total drone registrants).
We urge all drone flyers to operate safely. The consequences of unsafe flying can be catastrophic!
We hope that we have been able to shed some light on what’s really happening in the drone market place, using the best facts available today. We invite you to check out the second part of this review, where we put together our collective experience and the best minds to shed some light on the following questions: Can drones be used by malicious flyers to harm the public? Can drones really cause a commercial aircraft to crash? Can drones really be used to invade your privacy? What do we really think will happen in the drone market in 2018, onwards? Who are the real leaders in the Drone market 2018? Where can you go to find out real facts about drones?
Sources:
FAA G=Fact Sheet https://www.faa.gov/news/fact_sheets/news_story.cfm?newsId=21514
UAS Sightings https://www.faa.gov/uas/resources/uas_sightings_report/
May 2016 Registrations http://www.faa.gov/foia/electronic_reading_room/media/Reg-by-City-State-Zip-12May2016.xlsx
FAA Forecast https://www.faa.gov/data_research/aviation/aerospace_forecasts/media/Unmanned_Aircraft_Systems.pdf
FAA Registration data
https://www.faa.gov/foia/electronic_reading_room/media/sUAS_Hobbyist_Registration-2017-10-31.xlsx
https://www.faa.gov/foia/electronic_reading_room/media/sUAS_Releaseable_NonHobbyistRegistration-2017-10-31.xlsx