In the last few days the FAA has made two interesting decisions regarding drone operations. On January 10th it gave permission to drone manufacturer 3DR to fly drones in the ‘Class B’ airspace (where drones are usually completely restricted from flying in) around Hartsfield-Jackson Atlanta International Airport. This is the first time the FAA has given an exemption to a drone to be flown in the restricted airspace around a major airport. At the Atlanta airport 3DR is using drones to survey a parking structure that is scheduled to be demolished.
Then this week the FAA issued a temporary flight in a 34.5 mile radius around NRG Stadium in downtown Houston where the Super Bowl will be played this Sunday. The ban makes sense near the stadium, but 34.5 miles seems a bit excessive and there are questions exactly how drone owners can be aware of the ban on such short notice, or show strictly the ban will be enforced.
Both of these actions by the FAA show an important thing, that the FAA is being nimble in how they react to the use of drones. The team here at Drone Dossier feels this is a good development for the future of drones. The FAA has been cautious but it is actively trying its best to adapt its regulations to the realities of how drones are going to be used in everyday situations.
The recently ended Las Vegas CES show saw a whole slew of new ‘selfie drones’. But one of the first drones to push the idea—the Lily Drone—is calling it quits.
Lily robotics first revealed the idea behind its Lily Drone way back in 2014. The drone could be tossed in the air and will then autonomously follow you and take video and pictures. A lot of people thought it was a cool idea, Lily was able to get over $34 million in pre-sales. But poor execution saw the deliver date of the drone pushed back multiple times till finally this week the founders of the company announced they are shutting Lily Robotics down.
While the team at Drone Dossier does not have all the details, this seems similar to what happened to 3DR with their Solo drone—cool idea, really made execution carrying it out. In particular, a lack of experience with sourcing manufacturing and properly dealing with retail channels to actually get the drone to consumers.
There is no question that the drone industry offers plenty of investment opportunities, but it is not always easy to pick a winner. The story of what happened to 3DR serves as a cautionary tale of just how quickly the fortunes of a drone company can turn. More recently with GoPro experienced the barriers of entry that exist for companies trying to get into the drone space.
However, there is no reason why this should inhibit you from investing in drones, you just got to do your homework. The Motley Fool named AeroVironment (NASDAQ: AVAV), Ambarella (NASDAQ: AMBA), and Boeing (NYSE: BA) as the top three drone stocks of 2016.
AeroVironment is a industry leader in small military drones and it is actively using its expertise to move into commercial drones that can be used in agriculture and infrastructure surveying. Ambarella is a leader in drone cameras and compression of drone footage so it can be used in a real-time environment. Ambarella is already used in many drones on the market and is looking to expand partnerships further. Boeing is an aerospace leader that is very active in drones and can bring an insane about of experience, knowledge and connections government and military entities that want to buy drone technology.
Another way to invest is by putting money into Exchange-Traded Funds (ETFs) that focus on drones. This is a great way to invest in the industry without taking on all the risk of one company. Pure Funds’ Drone Economy Strategy ETF (ETF ticker IFLY) is one of the first to be set up and is open to investment. As of 12/09/16 it has has over $8 million in net assets and splits its value between 44 drone companies weighted by Pure Funds.
Chinese drone manufacturer DJI is still the undisputed king of the drone market, but American based 3D Robotics (3DR) is trying to change that.
This May 3DR will launch their Solo drone which promises to boast many tools to make flying easier for drone newbies. The drone will also feature the ability to plug your smart phone or tablet into controller to get a live first-person view from the drone.
As cool as this sounds DJI has already beat 3DR to the punch with its recently launched Phantom 3. The Phantom 3 boasts many of the same abilities as the Solo and has a whole month on the market without any real competition from 3DR.
But this is not the biggest problem for 3DR if they plan to be able to gain market share from DJI. Forbes, recently reported from confirmed sources that DJI is seeking to raise money at a $10 billion valuation, giving it the opportunity for a huge capital injection. While the exact amount DJI will raise is still unknown, it should easily surpass the $50 million 3DR raised in February.
When you add in the fact that DJI’s sales were somewhere around $500 million in 2014, and 3DR only did $50 million, it seems like 3DR has quite a mountain to climb. But as mentioned in Wired, one of the Solo’s strongest features is the fact it will be sold as an open system, allowing it to be more like the Android of drones.
But the question is, does that mean DJI is the Apple?