COMMERCIAL UAVs

What is Commercial UAVs and How Will It Change The World as We Know It?

The commercial UAV (Unmanned Aerial Vehicle) market, although still in its infant days, is expanding rapidly with a varied range of advanced software, hardware and operational products[1] . By incorporating the benefits of robotics and mobility, drones provide a flexible platform for remote sensing, delivery services and data communications and have already become crucial to industries like agriculture, weather monitoring and military defence.Seeing how rapidly drone technology has been adapted by a number of different industries it gives reason to believe that the commercial drone industry also may be on the verge of global adaptation and that it is altogether capable of massively changing the way businesses will operate in the future [2].

Moreover, services both of and by UAVs is expected to overrule traditional practices already in the next 5-10 years, and new vendors is going to germinate rapidly, offering new products and services whilst established commercial companies must transition to change by developing and introducing UAVs as part of their customer experience.The reason why commercial UAVs will disrupt the way in which businesses operate is especially because of the way it will transform how companies deliver their products and their end-to-end services to their end customers

The incentive behind why so many companies and industries are eager to put the commercial UAVs to use is the potential and benefits the drones hold. In a nutshell, drones offer access to locations otherwise out of reach to humans and in a much more efficient and cost saving fashion. If replaced with traditional truck delivery services, drones are likely to tremendously relieve traffic and contribute to massively reduce carbon footprint emitted from commercial delivery services. It would therefore be a financial, ethical and time-saving revolution and as the graph below depicts, commercial drones have attained tremendous investment value across the globe.

Fact sheet –  the Droneii.com Investment Report 2016

Barriers to entry:       

There are several barriers that will need to be overcome before the commercial UAVs can actually be widespread and adopted in the companies’ day-to-day services. These include legal, technological and resource restraints.

Legal barriers: The barriers to entry for commercial UAVs are heavily focused on the political and legal restrictions of UAVs as commercial vehicles, especially as they are in most countries not yet fully legalised. The reason why it has taken such a long time to work out policies for the commercial use of drones is the risks the operation of these vehicles pose, including risk of third-party hacking, weather issues, entering illegal or congested areas and the system errors. In the UK, The Civil Aviation Authority (CAA) set the rules for the use of drones, but has previously declared it illegal to fly beyond the unaided “line of sight”. This has made the commercial use of drones impossible. Now, although regulatory and legal framework governing practice of UAVs is inevitable, it is consequently reshaped in a more liberal manner, and in August 2016, The FAA (Federal Aviation Administration) announced new rules which spelled great news for opening the floodgates for the commercial use of UAVs, hopefully in the near future [3],[4].

Technological barriers: There are also some technological hindrances that reduces the ability for the drones to reach commercialised status. Firstly, as the battery life of the UAVs are still not durable enough to enable delivery further than 7.5 miles away from its storage depot, the drones are still not practically capable of taking over for traditional delivery. Although the manufacturers are consistently working to improve this performance-restricting issue it still means that the commercial UAVs is limited only to areas close to the depots, and still cannot alternate delivery services outside these ranges [5].

Secondly, another barrier to entry may also be the technology securing the packages that are being delivered. Present day drones do not have the competence to control who receives the package. It will therefore be important for the industry to develop a way to ensure that the UAVs delivers the products to the right buyers, especially when delivering to high-density areas where by-passers may get to the package before the rightful owners.  Without guaranteeing correct delivery the viability of the commercial UAVs is doubtful.

Lastly, today the commercial drones require a soft and safe landing place to deposit its load. Lack of private and suitable landing area, likely for example in mass-inhabited communities may therefore be problematic when receiving deliveries. This will severely reduce the opportunities for the commercial drones to be utilised in highly populated areas and all-together curtail the potential for success and global adaptation.

Resource barriers: Moreover, today’s commercial drones are still required to be controlled and operated by humans. If commercial use of drones were to grow large scale it would require immense resources for the companies to keep the required amount of employees with the needed drone licenses. The UAVs also has relatively small payloads. The technology is predicted to develop more robust and capable vehicles, but as of now there are still weight legislations restricting the unmanned commercial drones to a total weight of 20kg, making it difficult to carry larger amounts of packages at a time [6]. This is severely  limiting the opportunities for serving large size areas in efficient and cost saving ways, and also requires the companies to have a vast number of drone vehicles to be able to deliver all parcels in time.

Commercialisation: 

There are generally two types of industries that is specifically moving to the space of commercial UAVs. The drone manufacturers, that are already developing UAV technologies and are looking to invent in the new commercial drone field, including DJI, Parrot and 3D Robotics. And companies that are primarily focused on other industries like retail and delivery services.

Organisations including Royal Mail, Asda, DHL, UPS, Google and Amazon are companies that have little previous experience in the drone field, but are now officially considering or have already experimented with producing drones used for commercial services, more specifically in the delivery of products.

Below is a video of the Amazon Prime Air, a drone delivery service promising to deliver packages in a maximum of 30 minutes. Amazon has announced that they aim to launch their drone deliveries in 2018, but commentators have critiqued the statement, saying that a 2018 launch is ‘hugely optimistic’.

Competences:

There are various competences companies wishing to commercialise the use of UAVs should aim for in order to build innovation muscle and succeed.

Aviation: Mark Bathrick, the director of Aviation Services at the U.S Department of the Interior (DOI) suggests that aviation is one of the core competencies that companies must master to be successful. Many of the companies that is today looking to innovate in the space of commercial UAVs are tech companies with little to no experience with aviation. This makes them less able to take and understand the vehicles and the measures needed for example to prevent accidents. Companies that master aviation are also more probable to manage to move quickly as the technology and market develops, due to a better understanding of the needs, challenges and opportunities that the drones may bring.

Culture: Secondly, for a company to achieve success in the field of commercial drones it may be vital to develop a culture that incorporates the UAV technology. Today, customer experience is heavily weighted on the online experience the consumers have with a company, using drone technology as a delivery service may require more involvement from the end consumer (e.g drone landing mats) and new corporate culture should be shifted to also reflect this new step in the end-to-end service. Also, by creating a creative corporate culture, encouraging creative problem solving, independent thinking and openness to ideas, companies can differentiate and diversify to gain advantage.

Managing change: Moreover, the field of commercial UAVs is fast-moving and demands the companies that wish to compete and grow in the industry to constantly keep up to speed. By being sensitive to situational forces and attentive to change, the companies might be more inclined to survive the agile environment. Furthermore, to manage change, companies that are intelligent in their risk-taking can ensure calculated and well-developed leverage.

Security: Lastly, mastering to understand and stand out regarding security may also be a crucial competence for the UAV companies. One of the biggest issues that commercialisation of drones face is the security, both from the viewpoint of politics and the community. As the commercial drones hold serious risks, ensuring security with data security, multiple levels of risk mitigation and safety programming will be a central pressure point and therefore arena to differentiate.

Competition:

Amazon Prime Air’s newest drone delivery model (www.superegoclothiers.com)

Both companies that already operate in the UAV industry or companies engaged in other industrial fields are likely to explore and innovate in the space of commercial drone technology as the market begins to flourish. The legal restrictions requiring drone-operators to have special education and driving licenses is also expected to be abandoned presently, and this will likely encourage and open up for new entrants and ultimately lead to reduced price-pressure.

Also, many of the big and resourceful companies that are considering implementation of drones in their services are producing the UAVs independently, including Amazon, UPS and Google. It will therefore be difficult for smaller scale and less prosperous organisations to keep up with the innovation and diversify in the market. Drone manufacturing companies like DJI, Parrot and 3D Robotics are also already affluent and recognised companies in the drone market and is therefore likely to also succeed in the commercial drone industry, posing a risk to all new entrants, both the smaller competitors but also the more resourceful companies like UPS and DHL.

Disruption:

The up and coming industry of commercial UAVs is likely to disrupt many various companies and even industries including the parcel delivery industry, retail companies in various fields including fashion, food and e-commerce, insurance and real estate.

Parcel delivery: the way parcels are delivered is likely to be massively disrupted by the widespread adaptation of commercial drones. As mentioned, major courier companies like UPS and DHL are already experimenting with the use of UAVs as delivery vehicles. Although drones are not likely to replace trucks and lorries completely as there will probably be certain weight restrictions to drones also in the future, it is likely that the need for other vehicles will massively scale down as soon as the UAVs are introduced.

Retail: The way businesses are perceived and operate in relation to their customers is also probable to transform once drones make their entry. E-commerce is of course on of the industries that will be disrupted by the commercial use of UAVs, but it is likely that companies otherwise not operating in the e-commerce field will experience massive pressure to do so as the drones offer delivery within minutes, and consumers will eventually require and expect this same service. The fast-food and grocery home-delivery industries are also likely to be disrupted by the commercial drone technology, and pizza-company Dominos have announced that they are looking to introduce UAVs as one of their delivery vehicles as soon as it is possible.

Insurance: the normally quite technology-laggard industry of insurance is also likely to be disrupted by the commercial UAVs[7]. The commercial drones can dramatically change the way insurance claims and insurance companies operates and the amount of time and resources needed to process each claim, as the drones could be utilised to give insurers aerial view of a property within minutes.

Real estate: another industry that commercial drones may transform in the years to come is the real estate business. The way in which realtors market and catch the attention from interested buyers may shift. First of all, drone photography is far cheaper than the alternative which is the helicopter, and some real estate companies have already begun to utilise drones and aerial photography as part of their house listing photos and videos. The way in which we partake in property viewings may even change, and utilising drone technology instead of physically visiting a house is expected to increasingly gain popularity[8].

Below is an example of how a drone tour may be used as part of the real estate industry’s services in the future:

Conclusion:

Commercial UAVs are likely to be a disruptive innovation in a number of industries. If hesitating or resisting to move with the revolution that is likely to come with the commercial use of UAVs, a boundless number of companies may struggle to survive. This is because of the benefits the commercial drones may hold, like cost efficiency, area reachability, severely reduced carbon emissions and time effectiveness both for company and end consumer.

It is clear that there are several obstacles to be overcome to successfully launch commercial UAV services, including the limiting legislations, advancing the technology to be able to deliver to further distanced areas, ensuring safety etc. But due to the pushing and eagerness from both small and larger companies and industries to innovate and experiment in the field already, it is likely that the global adaptation of commercial UAVs is just around the corner, and that it will transform how businesses operate and ultimately the world as we know it.

Bibliography:

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[2] Van Hoy, G. & Wang, B. (2016). How Will Commercial Drones Change your Business. Gartner. Retrieved from https://www.gartner.com/webinar/3391619

[3] Grosack, M. (2016). Commercial use of drones: what is allowed? What is not? FAA, Congress and the states are weighing in. DLA Piper. Retrieved from https://www.dlapiper.com/en/us/insights/publications/2016/03/commercial-use-of-drones/

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[6]  Dronethusiast. (2017). EASA Sets Out Drone Regulations for Europe – Dronethusiast. [online] Available at: http://www.dronethusiast.com/easa-sets-out-drone-regulations-for-europe/ [Accessed 2 Mar. 2017].

[7] Weismantel, G. (2016). 5 Ways Drones Will Impact the Insurance Industry by 2020 | Vertafore. [online] Vertafore.com. Available at: http://www.vertafore.com/Resources/Blog/5-Ways-Drones-Will-Impact-the-Insurance-Industry-by-2020 [Accessed 2 Mar. 2017].

[8] Ungerleider, N. (2016). How Drones Are Transforming The Way You Shop For Real Estate. Fast Company. Retrieved from https://www.fastcompany.com/3056615/how-drones-are-transforming-the-real-estate-industry

Belicove, M. (2016). How Drones Will Change Your Business. Entrepreneur. Retrieved from https://www.entrepreneur.com/article/271928

Birmingham Policy Commision. (2014) THE SECURITY IMPACT OF DRONES: CHALLENGES AND OPPORTUNITIES FOR THE UK. (2014). Birmingham Policy Commision. Retrieved from http://www.birmingham.ac.uk/Documents/research/policycommission/remote-warfare/final-report-october-2014.pdf

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Reuters,. (2016). Domino’s planning drone pizza delivery service in New Zealand. The Guardian. Retrieved from https://www.theguardian.com/business/2016/aug/25/dominos-planning-drone-pizza-delivery-service-new-zealand-auckland-trial