Mid-2018 State of the Drone Market – Predictions and more….
or, 2018 Drone Report…
As of mid-2018 there are a number of factors affecting the current Consumer and “Consumer Enterprise” drone market – some of which we will explore in this article.
Consumer Enterprise – what’s that?
Oh, it’s just a term I made up on the fly. Traditionally, the civilian drone (UAV) market has consisted of a few segments:
1. Toys – generally semi-disposal models to learn on. Some things have changed in this market as the higher ($100-$300) end of this range now features programmable models as well as some equipped with GPS.
2. Consumer Camera Drones – this has been the real driver of sales and profits over the past 4 years and consists of GPS drones with app control and stabilized cameras. Current prices run from $400-$1500, although there are some “prosumer” models at the higher end with better cameras (Phantom 4 Pro).
3. Enterprise Drones – Starting at about 3K (DJI Inspire) and headed up to many 10’s of thousands of dollars, these are typically used for professional videography such as the drone shots you might see on network and streaming hollywood productions. Smaller agricultural and security drones as well as surveying models (with software designed for such) are also part of this group.
My new category, Consumer Enterprise, covers the segment which would appeal to contractors, inspectors and many others who use their drones for various tasks that either make…or save…them money and time. An example would be roofing or landscape development companies, land trusts, solar PV installers and various other construction trades. Up until now, this segment has settled for the consumer models, however their tool budgets allow them to easily step up to better models. These firms, usually relatively small businesses, are accustomed to spending money on better tools even though the consumer grade might do the job in many cases.
Two examples of such products are either available now…or will be very soon. The Phantom 4 Pro with the CrystalSky display offers features which are very important to the contractor – from the better picture and video capabilities to the vastly superior display. The upgraded Obstacle Avoidance system is also a big plus for this group of users, as their pilots may not be as experienced or well trained as those of us who have spent years navigating through trees and wires and other barriers. Another upcoming unit from DJI, the Mavic Pro 2 series, will feature more portability, a zoom lens and even better obstacle avoidance.
2018 General Market
As predicted by Droneflyers.com and other industry groups and consultants, the consumer drone market has stabilized in 2018. This is a much different market than the 50-100% growth seen in the past years and present challenges to all drone manufacturers. Droneflyers works closely with the Consumer Technology Association (Consumer Electronics Trade group that puts on the CES show in Las Vegas) to project future trends. The numbers produced have been shown to be quite accurate – or at least as accurate as possible given the lack of reporting in this industry. Here are some of the projections as well as our editorial surrounding them……but first….
Why did the Market for Consumer Drone Plateau (stabilize)??
Our guess is that most buyers who wanted a decent Camera drone for hobby or light commercial use already have one…or two…or more! As a result, they are not in the market for each and every new model that fills the shelves. Since the 2015 release of the DJI Phantom 3, consumer drones have been “good enough” to satisfy more users. Prosumers have often purchased the latest and greatest, but that market is much smaller in numbers than the new buyers. In a sense, this is the same with laptop computers and even smartphones…once most customers have one that is good enough, there is no reason to buy a new one every year – or even two. Value orientated consumers will likely keep these devices for three or more years.
Another limitation is the actual market for drones. A construction company office might have 20 staff members with computers and 40 contractors in the field with phone and/or tablets. However, the same company can likely get by with 2-4 drones, so the numbers will never match that of ubiquitous computers. Rather than 2 or 3 devices per person, drones are more likely to number one for every 10-20 persons in such an operation. Some exceptions may apply in the Home Inspection and similar fields where a 1 to 1 ratio may be apt.
The Summary – then the numbers….
The CTA projects a sideways market in the Consumer Sector for the next couple of years. Highlights are:
- No substantial increase in consumer camera drones in the USA.
- Slight increase in the toy market in the USA.
- Slightly better increase worldwide in the consumer camera drone market (5-7% per year).
- Slight increase in total dollars in most all categories – year by year.
For most of our readers that information should suffice – sure, we could dig into the details but there is little that would be gained by it. Those who want a deeper study or opinions could hire a consultant or purchase the full study (very expensive!) from the CTA.
Some tidbits from the report are below – these various spreadsheets show info for the next couple of years.
Our Opinion – All in All
Let’s be honest – the 50-100% yearly growth of this industry was exciting – and good for the pocketbooks of many. However, all such things come to an end and we are entering a more stable market. That means a competition for the existing level of sales. As has been reported on my Droneflyers and other site, the “Drone Wars” are largely over with DJI having grabbed a vast percentage of the Consumer Drone Dollars. This is unlikely to change – in fact, the lack of sales growth may cause many would-be competitors to drop their plans.
On the other hand, a few companies have been quite stubborn in their pursuit of a small chunk of the market – namely Parrot, Autel and Yuneec. Yuneec and Parrot have had some massive problems (quality, timeliness, etc.) but are not yet fully down for the count. Both have introduced newer portable models in an attempt to grab some market share. Autel has proven to be fairly reliable….although not growing quickly and moving slowly. Still, the lack of big missteps have kept them in the game.
In order to prosper, these 2nd tier makers need to grab a reasonable share of the market…5% is, in our opinion, “just holding out” in terms of staying in the market. At 10% a company could likely be profitable and continue with R&D, customer service and other associated costs. All in all, our expectation is that an 80/20 divide is likely to develop, with DJI seeing the larger share and other companies splitting the remainder.
Toy Grade Models largely rely on up-selling uneducated buyers for profitability. A barebones toy which can be had for $35 can often be found at over $100 (with high sales of such) once it is dressed up with some features like an App and FPV features.
Note – we have not separated out or addressed racing types of Drones as this market is very small and somewhat mixed in with the toy grade (higher end)….it’s simply not large enough to move the needle and is unlikely to continue on that path.
Unlawful and irresponsible use of consumer drones remain a problem and this is likely to continue. A watershed event such as the bringing down of a small aircraft could cause shock waves in the industry. Drone manufacturers and all of those involved in the industry will have to continue to address these safety concerns as more and more drones are integrated into the US Airspace.