#056 – Drone Industry Review: Q3 2017

In Podcast by Ian Smith

Drone Industry Review is a special, quarterly podcast series brought to you by Commercial Drones FM. It briefs listeners on the most important and newsworthy happenings from the previous quarter in the drone industry. Covered topics include drone hardware, software, regulations, funding, M&A, delivery drones, and how drones affected various industries in that quarter. This is the third episode in this series where we conduct the Drone Industry Review of Q3 2017.

Check out the Full Episode Transcript below for the entire script of this episode.

Drone Industry Review: Q3 2017

Welcome to your Drone Industry Review for the 3rd quarter of 2017!

If you’re new here, the Drone Industry Review series is meant to give you the most important news from the past quarter in the drone industry, in less than 20 minutes.

But before we get this episode started, I’m giddy with excitement to share that I will be hosting the first, official Commercial Drones FM event in San Francisco on November 16th.

This inaugural meetup will start off with a panel, moderated by me, with guests from DJI, Altiscope, and DroneDeploy and it will start and end with plenty of networking.

We’re going to discuss opportunities, challenges, and the future of the drone industry. Space is quite limited so please go RSVP now at commercialdrones.fm/event— seriously, go RSVP. That’s November 16th in San Francisco and you can RSVP at commercialdrones.fm/event. Hope to see you there!

Alright, let’s get this episode started. Here’s your Drone Industry Review for Q3, 2017. 20 minutes on the clock—LET’.

HARDWARE – 4 min
First up is hardware. In Q3, DJI was in the news so often, they are deserving of their own category. So here it is.

DJI drama. Early in the quarter, we heard reports of a variety of companies that, for a fee, offer to jailbreak DJI drones in order to do things like bypassing no-fly zones.

This situation seemed to escalate when a purported, internal memo from the US Army leaked, courtesy of sUAS News, calling for all Army units to immediately discontinue the use of every DJI drone in their fleet (which was more than 300).

Then, a study was released by NOAA which said that some DJI drones (like the old S1000) were, in fact, secure, and did not send information back to DJI HQ in Shenzhen. BUT, it did reveal that other drones (like the Phantom 3 Pro) are sending encrypted data back to HQ. Additionally, and I can’t completely confirm this, but it was also reported that in some DJI drones, a secondary, hidden SD card is installed.

In response to this, DJI has developed the option for pilots to fly their drones without internet data transfer, called “Offline” or “Local Data Mode”.

Amidst all of this… “drama,” DJI this quarter announced an updated drone, the Mavic Pro Platinum, which is quieter and has 3 minutes more flight time than the original Mavic Pro. It’s nice to see DJI focusing more on airfoil design, aerodynamics, and incremental improvements.

And of course, they have the luxury of focusing on and introducing an incremental update like this because, DJI, the Chinese drone maker, has been rewarded with a $10 billion valuation, courtesy of Frost & Sullivan.

In other hardware news, a racing drone broke the Guinness World Record for speed, reaching 163.5 MPH.

Airdog released the Airdog II drone platform, meant to compete with—well, DJI and I guess GoPro? This drone follows the owner and films them via a battery-powered leash that the operator wears on their wrist, not by computer vision.

Ever wonder what kind of drones are used for filming Game of Thrones Season 7? Wonder no more. A Dutch company, AceCore, used heavy-lift drones called, NEO, to operate in lieu of helicopters for the HBO series’ demanding standards in Iceland, where temperatures of -20 degrees Celsius and very strong winds were a common occurrence.

In a tidbit of news that’s somewhat disappointing but not really surprising at all is that a preliminary NASA study determined that the sound of drones buzzing is more annoying than cars. (insert buzz)

A company in Florida developed a drone billboard that uses an attached, curved screen to display advertisements while in flight.

Remember Lily? The drone company who imploded? Well, they’re back. A small drone company called, Mota, purchased the rights to Lily and whatever was left of their intellectual property in order to re-release the drone. It costs $699, folds up, but doesn’t include many of the original selling points of the first Lily.

Interesting investment choice by the folks at Mota.

French electronics company, Parrot, introduced the small “Bebop 2 Power” quadcopter. At 1.15 pounds, it has a 30-minute flight time and an AI photography system.

The drone company formerly known as Delair-Tech (now called just, “Delair”) has announced a new fixed-wing aircraft called, UX11. It’s based off of the Trimble/Gatewing UX5 platform, which they previously acquired, and has pretty incredible specs. Continuing to push the industry towards our internet-connected future, all command and control is done through 3G cell network for the UX11. Very cool.

Sony’s VTOL aircraft, which popped up for the first time at least one year ago, is now back in the news after the company’s internal restructuring process. I wonder if we’ll actually ever see this drone in the flesh.

In the world of sensor manufacturers, SLANTRANGE announced that they reached an agreement with the very large European enterprise, Bayer. SLANTRANGE will be providing them with advanced data analytics.

And FLIR launched the FLIR Duo Pro R, calling it, “the ultimate drone thermal imaging solution”. Duo Pro R combines a high resolution, radiometric thermal imager, 4K color camera, and a full suite of on-board sensors to bring you the most powerful dual-sensor imaging solution in the world for small commercial drones.

And finally, Propeller, traditionally a software company but now no stranger to the hardware game, has reached a global distribution agreement with Trimble whose network will sell the company’s Aeropoint ground control points.

SOFTWARE – 2 min
Now, on to software.

FlytBase released what they’re calling, “the World’s First Internet of Drones Platform” and the FlytPi – A Turnkey companion computer that users can install in compatible drones. It comes pre-loaded with the commercial edition of their operating system, FlytOS.

3D Robotics, who are no longer present in the hardware section of the quarterly review, announced that their cloud photogrammetry software is now powered by none other than Pix4D. Additionally, 3DR also dropped the bomb of officially supporting DJI drones for their flight control software. Drone industry aficionados will understand the irony here, as 3D Robotics was once the “American Drone Company That Was Promised”, attempting to go head-to-head with DJI, and ultimately failing. If you can’t beat them—join them.

And some Intel news from the software front—Intel’s drone division continues to make big strides in our nascent industry. They’ve selected Delair, as the strategic partner for the development of their new Intel Insight software analytics platform. Intel CEO Brian Krzanich himself announced this onstage at the InterDrone conference and showed off how it handles change detection and inspection workflows. Very neat.

Regulations & Safety – 3 min
Alright, let’s talk Regulations and Safety. There was no shortage of news in this category during Q3 ‘17 so I’ve attempted to boil this down into only the most important points

First with the United States.

Here are some numbers. There are now over 50,000+ Part 107 commercial drone pilots as of August 1st 2017 and 5,000 alone were added, just in July.

CNN, the media company, got the first closed-set waiver for flying over people which is a big step forward for Part 107 operations and flights over people in general. If you’ll recall, the FAA previously had quietly blanket-revoked closed-set exemptions.

DroneLawJournal.com this quarter wrote a very nice piece on how if you, as a company or individual, hire a hobbyist drone operator for work in the U.S., you might be committing a federal crime.

Planning a flight over one of America’s beautiful landmarks? Don’t. The FAA has restricted drone flights over several monuments, like Mount Rushmore and the Statue of Liberty.

Planning a flight over your local, neighborhood U.S. military base? You might really want to rethink that. A new policy straight out of the Pentagon authorizes military bases to shoot down drones that are deemed as a threat.

This type of rulemaking is not very surprising, considering the other recent news of the alleged Army helicopter that was hit by a drone in mid-flight, over New York.
And here’s an amazing development; a new initiative from the FAA called Low Altitude Authorization and Notification Capability, or LAANC, will allow drone operators to apply for automated, digital authorization at 50 airports starting soon. Companies like AirMap will be integrating their services with this technology.

Transport Canada has made some changes and updated their commercial drone regulations to allow for more operational areas around airports, which one Toronto-area drone pilot has called, “a step in the right direction—however, more work needs to be done”.

Portugal is expediting a law that will introduce mandatory registration and insurance for drones weighing more than 250 grams after airplane near-misses.

And the UK is introducing a safety test and drone registration which will be mandated for owners of drones over 250g after research funded by the Department for Transport, the British Airline Pilots Association and Military Aviation Authority found that drones weighing 400g+ could damage the windscreen of a helicopter. They also found that it would take drones larger than 2kg in mass to down an airliner.

Shake-ups, Funding, & Mergers and Acquisitions – 2.5 min
Now for my personal favorite section, Shake-ups, Funding, and Mergers and Acquisitions.

To preface this section, a new report puts the Commercial Drones Market at a 35.26% CAGR by 2021. Absolutely no idea how accurate that is, as it’s reported by MarketWatch and the report was done by a company called, “Reportsnreports”. Sounds legit.

There are a bevy of funding announcements, totaling $98,574,300 by my count, and here they are:
Skyspecs raised $574.3K in a Debt round
Anti-drone radio wave startup SkySafe secures $11.5M from Andreessen
Atlas Dynamics Completes an $8 Million Funding Round
Betterview raised $2 million to analyze drone footage for insurers
Airobotics Raises $32.5 Million in C Round to Meet Growing Demand in Mining and Homeland Security Industries
Mitsui partnered with UK drone specialists Sky-Futures and backs them with a $4 million investment
A startup (Skydio) created by ex-Google engineers is raising $40 million to make drones that fly themselves
And Robotic Skies’ maintenance network raised money as well

Snap was in talks to buy Chinese selfie-drone maker Zero Zero Robotics for $150M-$200M.So a bit of background here, in April 2016, Zero Zero Robotics closed its Series A round, bringing in $25 million of investment. They also sell their drones in Apple Stores.

So this Snap/Zero Zero Robotics deal has reportedly gone through, marking the second drone company Snap has acquired in as many quarters.

Keep your specs peeled for a flying Snap camera soon.

Measure acquired Pilatus Unmanned. DroneDeploy partnered with DartDrones to bring bespoke drone mapping and photogrammetry training to drone pilots. And DJI named Roger Luo as the company’s president.

A^3, Airbus’ Silicon Valley innovation office, started a new project called, Altiscope, for creating blueprints in the sky and tackling the UTM challenge.

And rounding it off are two pieces of bad news—Drone360, an industry print magazine, is shutting down after lower-than-expected growth, and one of my favorite of the OG, high-end drone manufacturers, Aerialtronics, is in suspension of payments and looks to be having a tough time financially.

Autonomy and Flying Cars – 1.5 min
Now, the category everyone has been waiting for… Autonomy and Flying Cars.

I’m debating on whether to start solely referring to “flying cars” as electric VTOL aircraft but until that term becomes more popular, I’ll continue saying “flying car” for now.

In a survey that will surprise no one, U.S. consumers have been cited that they might not feel safe flying in a self-driving passenger drone.

Delorean, yes that Delorean, is making a flying car. One of the Delorean family offspring has taken to the idea that the cult-like status of the Back To The Future machine will be a perfect brand for our electric VTOL future.

Germany’s Volocopter, one of the most promising and currently-operating electric aerial vehicle companies, raised $30 million from Daimler for its flying autonomous taxi.

China’s Tencent, was the lead investor in a $90 million fundraising round announced in Q3 by flying taxi-car-electric-aircraft startup, Lilium. Money is starting to pour into the human-carrying sector of flying robots.

And a small company called, Pyka wants to make autonomous single-person aircraft a part of our reality, so they’ve built a 400-pound prototype. They’re part of startup accelerator Y Combinator. While they’re working out the kinks in the regulatory challenges, Pyka’s keeping busy by using their aircraft in New Zealand as an autonomous crop duster.

Delivery Drones – 1.5 min
Prepare yourself—we’ve now reached the Delivery Drone section.

Alphabet’s Project Wing is testing a new delivery drone in rural Australia. Walmart has started to test their delivery drones in the U.S., in Central New York. Walmart has also applied for a patent for a blimp-style floating warehouse.

Speaking of delivery drone patents, Amazon is always good for a couple of those per quarter. The eCommerce behemoth filed a patent that would allow a drone to capture video of a house and make purchase suggestions to customers, then followed that one up with a new filing which calls for a network of mobile workstations that would act as a maintenance hub and merchandise warehouse for the company’s drone fleet.

I know what you’re thinking—all of those Whole Foods locations around the U.S. are Prime locations for Amazon’s delivery drone hubs.

Matternet and Mercedes Benz’s intriguing partnership has completed its first delivery in Switzerland.

California banned marijuana drone deliveries, as if that was already happening, and the world’s largest national drone delivery network will apparently be launching in Tanzania in 2018, courtesy of startup, Zipline.

And my favorite piece of news coming from delivery drones this quarter? Among all of the pretty incredible news previously mentioned, Flirtey literally released a press release that commemorates the anniversaries of their previous press releases. Because we needed to be reminded. Ok.

Entertainment Drones – 0.5 min
Entertainment drones.

File this one under the category—there’s now a drone that promises to walk your dog along a GPS route.

And then we’ve got two drone light shows—one over a Metallica concert and the other, an Intel swarm of 300 lit up the Los Angeles night sky, promoting the upcoming Blu-ray release of Wonder Woman.

Insurance – 1 min

Insurance companies have been flocking towards drones this quarter. Spurred on by catastrophic damage from hurricanes Harvey and Irma, hitting the southeastern United States, drones have been given an international stage to truly showcase their utility. In the wake of these disasters, drones were deployed en masse—not just for insurance companies to help speed up claims but also for search and rescue efforts, which we’ll talk about a bit later.

Around Hurricane Harvey in Houston, Travelers Insurance, based out of Hartford, CT, had 65 certified drone pilots among their 600 employees deployed to the Houston area.

EagleView made breakthrough advances in property insurance claims and underwriting technology by implementing machine learning into their product.

The Catastrophe Response Unit Adjusters (CRU Group) selected drone startup, Kespry’s industrial drone platform for claims operations.

And Farmers Insurance has launched their own drone program.

Inspection & Tower Industry – 0.5 min
Inspection and Tower Industry.
Drones continue to flourish due to the massive safety and cost-saving benefits they bring to inspections.

AT&T is exploring Artificial Intelligence for their UAV tower inspections in order to attempt to automatically identify issues to minimize human analysis. And other various telecom companies have used drones to restore services after hurricanes.

HAZON passed a major bridge inspection milestone, completing 100,000 linear feet (nearly 19 miles) of rail bridge under their gaze. And Airbus Aerial is using a drone + satellite combination for their utility inspections and vegetation encroachment monitoring activities.

Public Safety & Search and Rescue – 2 min

Public Safety and Search and Rescue.

First, a huge shoutout goes to all of the teams that sacrificed their time, spending it on helping those affected by the latest disasters by using drones. And a high five goes out to the FAA for officially giving support for the various drone assessments happening in Houston and Florida and other affected areas after the hurricanes swept through.

But this is a reminder to ground your drones in disaster scenarios like those unless you can fully coordinate your efforts with the officials. It’s just not safe if you fly without permission.

Australia will deploy a fleet of drones to patrol its shores for sharks.

And one of the oldest drone uses that first inspired me that I’m thrilled to finally see deployed, are drones that carry life preservers and deliver them to swimmers in peril. It’s now happening in France.

Battelle’s DroneDefender™ Joins Forces with Dedrone in a move which would explore ways to create an end-to-end solution incorporating drone detection and classification with defeat technology.

Stanley Black & Decker will add drones to its commercial security business

The Insect Control Branch of Winnipeg is asking for $36,500 to use drones to combat mosquitos.

UK Police launched their first dedicated drone unit.

And Firefighting drones could take flight in San Francisco by 2018.

Whoo, and the final tidbit I’m leaving you with, which gave me a nice hearty chuckle:

The headline read, “Amateur Drone Lands on the U.K.’s New Aircraft Carrier, No One Even Notices” A photographer landed his drone on the flight deck of a new British aircraft carrier. The operator reported himself and says he did not mean to do it, the drone hit a gust of wind and the auto-land functionality kicked in.