Commercial drones

A Chinese firm has taken the lead in a promising market

SOMETHING new is in the air. Look up as you approach the plaza outside the building where Da-Jiang Innovations (DJI) has its headquarters, in the Chinese city of Shenzhen, and you may well see a hovering eye in the sky staring back at you. It belongs to a drone made by DJI, a pioneer in the nascent market for commercial unmanned aircraft.

On March 8th, at press events in New York, London and Munich, the firm launched its new Phantom 3 range of drones. Even the basic model has a built-in camera that takes 12 megapixel stills and video at the “1080p” high-definition standard. The firm, founded in 2006 by a mainlander who studied engineering in Hong Kong, has become a leading light in the industry. It has filed hundreds of patents, and is launching lawsuits against rivals it suspects of infringing its intellectual property.

DJI’s drones are lightweight and relatively easy to use. Newer models come with built-in GPS and a motorised mount that stabilises the camera while letting it rotate in several directions. Considering the technology embedded inside, they are also inexpensive: a new Phantom 3 can be had for about $1,000.

Rather as Boeing did with commercial airliners in the 1930s, DJI is today leading the charge in transforming civilian-drone manufacturing from something for hobbyists into a proper business. The Association for Unmanned Vehicle Systems International, an industry body, predicts that drones will become ubiquitous, with all sorts of uses, from crop monitoring to atmospheric research, from oil exploration to internet provision (see article). WinterGreen, a research firm, forecasts that global sales of civilian unmanned craft will approach $5 billion in 2021.

Venture capitalists and technology companies, from Boeing and GE to Qualcomm, are now pouring money into drone firms. An American outfit, 3D Robotics (founded by Chris Anderson, a former journalist at this newspaper), raised $50m in venture capital in February. Ehang Guangshi Technology, another Chinese drone startup, recently got $10m in venture-capital funding

Now, rumours are swirling in Silicon Valley that DJI is looking for its first injection of outside cash. It is thought to have made around $500m in revenues in 2014 (the company declines to confirm this), and it may be on track to become the first maker of consumer drones to reach a billion dollars in annual sales.

There will be growing pains. As dronemakers’ sales soar, so will its customers’ expectations of good service. On DJI’s website, users grumble that a firm of its size should put more of its resources into this area: “Try to call them…and they treat you like you are an inconvenience,” writes one. Over-regulation is another risk. A Phantom drone crashed onto the White House lawn in Washington, DC, in January; in response, DJI rushed out an upgrade to its drones’ onboard firmware that included many new “no-fly zones”, to head off the risk of outright bans. Although America’s Federal Aviation Administration plans to relax its curbs on drones, they will still have to stay within sight of their human operators and only fly by day.

Such is the civil-drone industry’s potential, DJI is bound to face a rising number of competitors, from China and abroad. It argues that it has a technological edge, including tens of millions of hours of flights, that newcomers will find hard to beat. It scorns the idea that the defence giants who make drones for America’s armed forces will eventually muscle in on its business: yes, they are technologically advanced, says DJI’s Andy Pan, but “they take five to six years to introduce a new model whereas we take five to six months.”

In reviewing the Phantom 2 Vision in January 2014, the New York Times gushed that just five years ago such kit “would have seemed like a science-fiction film prop or a piece of surveillance hardware flown only by the sexiest of superspies.” The fact that this model is now obsolete speaks volumes for how quickly the industry is advancing.

 

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