How the Consumer Drone Market Is Starting To Look Like the Early Smartphone Market

Increased functionality at a lower price. As for its purpose: let the market lead. JL

Mike Murphy reports in Quartz:

While DJI’s drones are still about the same price they’ve always been, drones overall are getting cheaper. They’re all working on kits that will allow engineers to build programs to bring new functionality. This was also the case with early smartphones: When Apple opened its App Store, the possibilities for a mobile, internet-connected device seemed endless, and sales started to take off. Whether drones hit will depend on their ability to provide something new to consumers. Drones are, in many ways, flying smartphones
Ten years ago, Apple released a compact, rounded rectangle that changed how billions around the world interact and share information. Before the iPhone, and for a while afterwards, smartphones were generally clunky, complicated devices that tried to mimic the experience of using a computer in a far smaller form factor. But Apple set out to make a simple device that “just worked” and over the next decade, went on to sell one billion smartphones, and spur on an entire new sector of devices.
Apple was not the first smartphone manufacturer, and not even the first to sell one with a touchscreen. But its product resonated with the largest number of people, at first, which helped it to scale and work out favorable deals with suppliers to help it ship more smartphones over the years. After Apple’s initial dominance, the rest of the market essentially became commoditized, with the majority of manufacturers building hardware on top of Google’s Android operating system. There are now smartphones that can do pretty much whatever you want them to, at whatever price fits, and then there are Apple phones. (The company still holds a 44% of the US smartphone market.)
The nascent commercial drone industry is starting to look similar. Unlike other mobile technologies launched in the last few decades, it’s not Apple, or any other Western company that’s leading the charge—it’s DJI (or Dà-Jiāng Innovations Science and Technology Company, if you’re being formal), a Chinese company based in Shenzhen. Apple features DJI’s drones prominently in its stores, and it’s easy to see why: They’re consistently viewed as some of the easiest to operate, and with each passing generation, offer some new level of functionality that makes them easier or safer to fly. (Its two most recent drones, the Phantom 4, and the Mavic Pro, both have sensors and cameras onboard that help them avoid people and objects while flying, along with all sorts of commands for flying autonomously.)
During 2016, there were signs of the issues facing the industry. 3D Robotics, an American drone firm set up by former Wired editor Chris Anderson, announced that it was pivoting away from high-end consumer drones into commercial drone software after tepid sales and an inability to keep up with the pace of DJI. Similarly, GoPro, the company best known for its portable action cameras, announced in late 2015 that it release a drone in the spring of 2016. It eventually showed off its drone in September, then had issues supplying them to customers, and finally quietly recalled the drone on the night of the US election in November. It said that it would start selling the drones again in February.
Then, Jan. 9, French electronics manufacturer Parrot, one of the earliest producers of consumer drones, announced that it would lay off one-third of its drone division—roughly 290 people—after missing sales estimates over the holiday season. As Recode’s April Glaser put the news: “It’s not easy to compete with DJI.”
And just today, drone startup Lily Robotics announced that it was shutting down, despite having secured $34 million in pre-orders. The company’s drone had been expected to ship at the end of 2015, but after countless delays, it seems that the company simply didn’t have the funds to build the drone it wanted to, and start a production run.
Rather like Apple, DJI’s drones are not inexpensive. Most of its newest consumer drones cost between $900 and $2,000, and its competitors at those prices seem to be dropping like stalled drones. (GoPro’s Karma costs about $800, Parrot’s between $700 and $1,300.)
Walking the halls of the CES consumer electronics show in Las Vegas last week, I saw a plethora of drone makers with booths next to DJI, Yuneec, Ehang, and other bigger players—the industry isn’t necessarily contracting, it’s just commoditizing like the early touchscreen smartphone market did. One player is staking its claim to the high-end market. With each passing year, as the technology it and others spearhead gets cheaper, that trickles down to cheaper brands. So while DJI’s drones are still about the same price they’ve always been, drones overall are getting cheaper.
There remains the issue of utility. You really can’t do much with a drone. Unless you’re an avid photographer, a big fan of remote-controlled helicopters, or racing things, these thousand-dollar flying machines aren’t of much use. All of these companies are trying to address this problem: they’re all working on development kits that will allow engineers and tinkerers to build programs and apps on top of their hardware to bring them new functionality. This was also the case with early smartphones: When Apple opened up its App Store, the possibilities for a mobile, internet-connected device seemed endless, and sales really started to take off.
Whether drones will ever become a hit in the consumer market or simply become more useful commercially will depend on their ability to provide something new to consumers. Drones are, in many ways, flying smartphones—they have sensors and computer systems inspired by those found in smartphones. Do we need an always-connected, always-hovering-nearby device? Unclear.