Winners and Losers in the Drone Business

by Tyler Cichewicz

Due to the overestimated and falling demand hobbyist have for drones, drone startup companies are shifting their sights from the consumer market to specialized business applications.

Makers of consumer drones like 3-D Robotics and Go-Pro are now adjusting their business models to focus on drone services in insurance, construction, agriculture, and entertainment rather than the consumer market.

A reason for the decreased demand stems from DJI, a Chinese technology company that cut prices for their consumer marketed drone, the Phantom 3, from $1,000 to $300.

“Four years ago, it was enough to take something out of a box, you push a button and it flies,” said Adam Lisberg, a spokesman for DJI. “The smart money is now in drone services.”

3-D Robotics initially raised more than $125 million from venture capitalists, but has since had its consumer business suffer greatly. Recently, the drone startup company announced a new vision for the company that targets the construction industry.

“It’s no fun watching prices fall by 70 percent in 9 months,” said Chris Anderson, Co-founder and CEO of 3-D Robotics.

After just a few weeks on the market, Go-Pro recalled about 2,500 of their drones because some units had sudden power outages. No time frame for replacement has been announced.

Zano, a European drone-maker that targeted novices and hobbyists, shut down last year.

However, under new, more relaxed U.S. regulations, drone-makers aim to capitalize on software and services that make use of aerial imaging for industries.

After releasing a new consumer drone, the Solo, for $1,500, 3-D Robotics was forced to shut down factories and lay off dozens of employees, virtually ending their course in the consumer drone market. However, the Berkeley based drone-maker plans to remodel the Solo to show the shape, size, and volume of items at a construction site.

Drone companies like DroneDeploy and Airwaves also focus on the construction industry by developing software that relays anything from the angle of a pipe to roof damage from a hurricane. A distinction from previous efforts is that the drone itself, is no longer the focus, rather the software.

Some industry experts do not believe 3-D Robotics will be able to successfully upgrade a hobbyist drone for commercial use. “It might be too little too late for 3DR,” said industry analyst Patrick Egan.

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