Five questions for Colin Snow

Snow is the founder and CEO of Skylogic Research, aka the Drone Analyst, and has made it his business to support the growing industry with research and analysis that helps turn new ideas and technology into products and use cases that generate returns.

We continue to hear, from sources official and otherwise, optimistic projections of growth to come in the drone market, including tens of billions in total sales, and tens of thousands of new jobs, but you’ve been a bit more skeptical. Why?

I used to be a market forecaster and a sales and operations planner, so I’m skeptical for three reasons. First, forecasts are always wrong—it’s just a matter of how wrong. That’s the first thing you learn as a forecaster. You also learn that the further out in time you forecast (one year vs. 10 years), the greater the error. Second, regulations raise uncertainty. In some markets, traditional forecasting methods just don’t work. Such is the case with the regulated markets. Commercial drones are and will continue to operate in a regulated market—regulated not in the sense that governments are setting price floors or ceilings, but rules that allow or disallow certain commercial activities—like what airspace you can operate in and whether you can operate beyond visual line of sight (BVLOS). Third, in this market, the boundaries are very blurry between drone product categories, technologies, and types of buyers and uses. That makes it virtually impossible to compare one forecast to another—or trust the validity of any forecast unless the source articulates definitions clearly and reasonably.

Do you share the concern expressed by some that restrictive regulations are putting America at a competitive disadvantage when it comes to innovation and development of drone technology, or do you think the current balance between restriction in the interest of safety and permissiveness is about right, considering how accidents could affect the equation?

I share both views—with one caveat on innovation and development of drone technology. On the one hand, I think regulations at the federal level are over restrictive for micro UAS, e.g., drones weighing 2 kilograms (4.4 pounds) or less. On the other hand, for drones heavier than that, I think the FAA Part 107 rules are just about right. Other countries have adopted simplified, risk-based regulations for commercially operating this class of aircraft. It seems to me that our “one size fits all” policy requiring a pilot’s license for micro UAS was unnecessary. In regard to safety, the ASSURE UAS Ground Collision Severity Evaluation Report indicates that a micro UAS’s monocoque frame could both absorb and distribute much of any energy from an impact, reducing the probability and severity of injury to a person. In regard to innovation and development of drone technology, I don’t think regulations put us at a disadvantage; I think costs do. I don’t see any American company that’s able to compete adequately with the low-cost structures of Chinese R&D.

If you were advising a new Part 107 pilot who wanted to start down the most lucrative path, what kind of mission type would you suggest the pilot focus on? (Such as, photography/cinematography, survey and mapping, inspection, or something else.) In other words, where’s the money for pilots?

I get asked this question a lot. And the simple answer is, start with what you know. Start with applications that service the industry in which you already have the most experience. If that industry is photography or cinematography, then start there. If you are a GIS professional, then offer drone services as part of your business. If you are most familiar with construction, then offer a drone-based inspection service. However, one thing I do warn people about is that just flying the drone may not be enough. In many states, for instance, you need to be certified and licensed to perform an inspection and offer that service. The same is true for surveying and mapping. Just because you have a drone and software that can create a map autonomously doesn’t mean you can legally offer that service.

When it comes to equipment, is the market share race over, and has DJI won? In other words, how much of the market, particularly for consumer, “prosumer,” and professional equipment, does DJI really control, and what, in your view, are the prospects that another firm will catch up?

For multirotors, yes, DJI has won the race. When it first looked like drones could be used for commercial purposes, analysts assumed that defense, avionics, and electronics suppliers would lead the market because they had a head start. Then came DJI, which is headquartered in Shenzhen, China, just outside Hong Kong. We estimate DJI has more than 50 percent of the commercial market worldwide and a larger portion of the consumer market. This plays out when looking at FAA data and our own survey data from buyers. Our data shows DJI with about 67 percent market share for all drones sold that cost between $1,000 and $2,000. DJI continues to release new product after new product and leads other manufacturers with technology like geo-fencing and even micro investments with its SkyFund. We predict this will continue well into the future given their current lead, their strategic partnership investment with Hasselblad, their recent investment into an R&D facility in Palo Alto, California, and the launch of DJI AirWorks, a dedicated development ecosystem event.

Has the market settled on a “going rate” for pilot services, or is that still a work in progress? Many new Part 107 pilots might wonder what to charge, and if that number varies by mission type, location, or other factors. What do you think?

No, I don’t think there is a settled going rate. I think it’s still a work in progress. Most drone-based service businesses I speak to begin with a per-hour rate that will allow them to remain profitable and then adjust that rate up or down depending on a number of factors like travel, insurance, and deliverable. With travel, you have to price if the job is outside of your regular service area. With insurance you have to determine the client’s requirements—especially if they want you to carry a large liability policy. Where it really gets sticky—and it seems to me this is the hard part—is with the deliverable and quality. Some clients want fully annotated reports. Others are fine with a simple map or set of images they can just download. I think everyone should evaluate their market value and ROI. They should be asking: What problems do my services solve and how much is that worth?

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