Don’t Ignore China’s Drone Market

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The last few years the drone industry has soared to new heights thanks to China. In a recent report, the China Business Review relays that 5 of the top 11 venture-capital funded drone companies are Chinese. On top of this, in 2015 Chinese drone giant DJI is estimated to have made up 70% of the drone market alone.

But China is not just exporting drones; its commercial sector has a vivacious appetite for this new technology. A lot of this has to do with the current economic and business environment in China. All over China the cost of labor is increasing, to help offset this rise, many parts of the Chinese economy are looking to technology like drones. In agriculture drones make the spraying of pesticides and fertilizers more efficient and Chinese provinces (Henan, Zhejiang, and Hubei) are already offering training and financial reimbursements for those that give drones a try.

Chinese internet giant JD.com is far head of its American counterpart Amazon and already is making thousands of drone deliveries. Additionally, JD is currently working with cooperative government agencies to expand drone delivery further. China is also pushing drone use in construction, sensing/mapping and film. In fact, today on a motion picture produced anywhere in the world it would be hard not to find a Chinese made drone somewhere on the set.

In the future new players will certainly arise, but for the time being China’s drone industry will still set the pace. But it also has plenty of investment opportunities. Just has Intel who has invested over $60 million in Chinese drone manufacture Yuneec.

Report: Sense and Avoid Will Experience Strong Growth Over Next Decade

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A recent report from Research and Markets reveals that the UAV sense and avoid market generated $41.5 million in 2015. The reports also predicts exponential growth over the next decade as the need for sense and avoid systems is driven by the overall increase in drone usage commercially, militarily and for hobby purposes.

Sense and avoid technology for drones will be crucial in making drone operations more autonomous. Indeed, many aviation authorities are making robust sense and avoid systems a requirement that must be proven before any non-piloted commercial uses of drones can ever take place. One of the interesting opportunities the report identifies is the use of sense and avoid for swarm drones.

The report the high cost (at this time) of sense and avoid systems as one of the major restraints of the industry—especially when it comes to collisions avoidance for sUAS.

The reports also identified the following companies it believes will be key players in the growing sense and avoid market.

Intel Corporation, Leonardo- Finmeccanica Spa, BAE Systems Honeywell International Inc., General Atomics, Panoptes Systems, Aerialtronics, Sagetech Corporation, Sagem Safran, IMSAR LLC, Thales Group, Exelis Inc.

Invest in the Drone Industry…But How?

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.

Drone Market to be 28.3 Billion By 2022

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A report published by MaretsandMarkets forecasts that the drone market will be worth $28.3 billion by 2022.

The report took into account both commercial and government/military markets for drones. In both cases it found that there will be more demand for smaller drones as payload technology becomes smaller. Although North American has dominated the market in recent years, the report finds that the Asia-Pacific region is primed for the best growth in the near future.

Consumer Reports: 10 Ways Drones are Changing Your World

Consumer Reports put out a great summary of the way drones are already changing the world we live in. Their ten choices include:

  • Package delivery
  • Agriculture
  • Photos and videos
  • Humanitarian aid
  • First responders
  • Safety inspections
  • Insurance
  • Internet access
  • Hurricane and tornado forecasting
  • Wildlife conservation

The team at Drone Dossier mulled over the list and decided to break it down into what it believes is the biggest business opportunity, what will have the most immediate positive impact, and which has the biggest opportunity to change the world.

Biggest Business Opportunity: Agriculture

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In the future, the agricultural sector will be the bread-and-butter of the commercial drone industry. Right now the worldwide market for agricultural drones is roughly $500 million. According to one study the worldwide drone market will be $3.70 billion by 2022.

The Bank of America Merrill Lynch projects agriculture to make up 80% of the commercial drone market in coming years and has the potential to generate $82 billion worth of economic activity in the U.S. between 2015 and 2025. A report from PricewaterhouseCoopers found the total available market for the agricultural drone business to be over $32 billion.

Talk about a sector that is primed for major growth. If things continue on the current trend, agricultural drones will transform the way food is produced.

First Responders (Most immediate positive impact)

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In emergency situations drones can be a lot of help. Drones have already been used after major disasters like earthquakes to visually comb areas that are not yet accessible to emergency personnel. This allows paths of entry to be found and people at risk to be identified.

Numerous law enforcement agencies and emergency response teams are looking into using drones to do everything to deliver defibrillators to identify bodies. Additionally, search and rescue authorities in places like Switzerland (where over 3,000 go missing annually—mostly due to hiking) are now deploying drones to help in rescue efforts.

Drone manufacturer DJI recently partnered with Irish startup DroneSAR to create an app that, “Seamlessly integrates a drone’s unique aerial perspective on life-and-death searches into incident management software, ensuring rescue crews can use drones effectively to save lives.”

Internet access (Biggest opportunity to change the world)

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As the saying goes, “knowledge is power” and in the history of the world there has never been a tool that offers as much ‘knowledge’ as the internet. While most of us take the internet for granted, the fact remains that a large portion of the world’s population still has no reliable access to the internet.

Facebook has poured a lot of money into their Aquila drones that basically use solar power to hover over areas and beam down high speed internet. While still in development, internet ‘raining’ drones like the Aquila have the power to provide affordable internet access to large swaths of the earth that have no current access.

Facebook is already in discussions with countries like Indonesia and India to use Aquila drones to beam internet to rural populations. When (not if) internet drones do start taking to the sky it will truly make the internet global and will unlock its power to billions.