Andy Trench made $2,000 a day in 2015 taking sky-high photographs along the East Coast with a drone he made himself. Now, that same work fetches about $175.
“It’s apparent that a lot of this industry is a race to the bottom,” said Trench, a Rhode Island entrepreneur who’s been operating remote-controlled aircraft for more than a decade.
Three years after federal regulators began allowing commercial drone flights, the fever to cash in has turned into a pitched battle for business. Prices for collecting airborne data have plummeted amid a flood of competition equipped with cheap, hi-tech aircraft that practically fly themselves. That’s pressuring operators, while handing customers new opportunities for affordable drone inspections, pictures and other services.
The challenge for providers is to figure out how to profit. Companies are rushing to carve out turf in an industry that’s convulsed by fast-paced breakthroughs in sensor capabilities and machine learning, while at the same time being throttled by slowly evolving regulation focused on keeping the skies safe.
General Electric Co., Intel Corp., Verizon Communications Inc., and well-funded startups including PrecisionHawk and Airware are among drone companies vying with scrappy, low-overhead entrepreneurs that helped give birth to the industry. They’re fighting over a pool of customers still limited by laws restricting unmanned aircraft to short daytime flights below 400 feet.
Shakeout Begins
If smaller drone pioneers want to survive the shakeout, they’ll have to figure out how to compete in a field increasingly tilted toward larger companies with deep pockets that can buy expertise to build their business more quickly.
PrecisionHawk bought Droners and AirVid last year to build out its network of pilots. Airware, a drone software services company, purchased a French data analytics firm called Redbird. Measure, a drone specialist backed by business intelligence consultant Cognizant Technology Solutions Corp., purchased Pilatus Unmanned and Helivideo Productions to expand its offerings in film and engineering.
More companies may fall out if their business model depends on the Federal Aviation Administration allowing long-distance flights. Drones are currently restricted to flying within sight of their human pilots, and companies that are more limited under current rules are likely to run out of cash before the agency makes any significant change, said Brad Declet, chief executive officer of Measure.
Smarter, Cheaper
Drones are enabling industrial companies to slash 25% off the cost of infrastructure inspections, which in the past required humans flying planes and helicopters, or dangling in harnesses beneath bridges. The price charged for a drone inspection of an industrial site has dropped to about $5,000 -- a third of what it was two years ago, said Alex Trepper, who founded GE’S new venture, Avitas Systems.
Trepper estimates that the “intelligent inspection” market for the power, rail, aviation and oil-and-gas industries currently tops $27 billion globally, with the new business of analyzing the collected data adding another $20 billion.