Where It’s At, Where It’s Heading
Assessing the health of an entire industry is not an easy task, but talking with industry leaders and looking for examples of growth and investment can help. My inquiries have led to discussions with General Atomics, Association for Unmanned Vehicle Systems International (AUVSI), Aeryon Labs and SensoFusion. Further viewpoints welcome; see the conclusion of this article.
Discussions included questions around these issues:
- The level of maturity of common technologies in use on UAV platforms and systems
- The level of maturity of integration of those technologies
- A sketch portrait of the industry
- Rough numbers or percentage of small players versus large ones
- The rate of consolidation of companies: Has it happened, or has it yet to happen?
- The financial underpinnings of the market: Does it have legs to go the distance?
If we start with a top-level overview of the industry, we find on the commercial side an industry trying to figure out what it is and who its customers might be. But a well-established military segment is quite mature. A large number of multi-rotor UAV suppliers use simple handheld controllers, all aimed at different applications where they are seeking a niche. The FAA’s release of regulations last year for use of small unmanned vehicle systems (sUAS) has provided a real boost to many more commercial pay-for-service ways these vehicles are now being used.
Multi-rotor UAVs are being put to use in surveying, filmmaking, newsgathering, real estate, crop and pipeline inspection, firefighting, law enforcement, security, search and rescue, and disaster monitoring and relief, just to mention a few applications. Of course, home and hobby flying your own drone in your backyard or open areas has fueled the Chinese DJI drone manufacturers’ growth significantly. While the FAA requires registration of private drones, this has not prevented an increase in commercial pilot reports of UAV incursions into controlled airspace, which appear to be on the increase.
Military Use. Then there are small, medium and large fixed-wing UAVs that appear to have been mostly developed for and used by the military. These include hand-launched surveillance drones for small groups of ground troops; mid-sized, longer range surveillance drones finding applications in commercial inspection; and the bigger GA Predator type aircraft that have become the U.S. military’s search and destroy long-range vehicle, which can carry significant ordinance.
At the top end, UAVs like Global Hawk are used for very high altitude, long-endurance surveillance. Finally, we have target drones like the Northrup Grumman BQM-74E, which earns its living pretending to be an enemy anti-ship cruise missile for the U.S. Navy.
Commercial Growth. Brian Wynne, president and CEO of the Association for Unmanned Vehicle Systems International (AUVSI), believes for the commercial segment that, “The UAS industry is primed for incredible growth. UAS are being used in all 50 states by industries like real estate, agriculture and the oil and gas industry for more than 40 different types of business applications, including aerial photography, emergency management and utility inspection.”
More than 500,000 people have registered their UAVs with the FAA in the U.S., and around 20,000 of those are looking to start commercial operations. AUVSI expects more than 100,000 jobs will be created when UAS are integrated into and allowed to operate in the U.S. National Airspace System (NAS).
However, Wynne went on to comment, “This this can only happen if the government puts in place a true, holistic plan for full UAS integration that includes flights over people, as well as beyond line-of-sight operations, access to higher altitudes and platforms above 55 pounds.” AUVSI estimates that in the first decade after full UAS integration into the NAS, these commercial operations could generate more than $82 billion is economic impact.
Even before the FAA’s release of formal regulations (known as Part 107) for use of sUAS in June 2016, more than 5,500 businesses received approval to fly for commercial purposes. AUVSI published a report analyzing these applications: “Commercial UAS Exceptions By the Numbers” provides an overview of the developing commercial UAS industry in the U.S. (See auvsi.org/advocacy/exemptions70)
More than 90 percent of these businesses make less than $1 million in annual revenue and have fewer than 10 employees. This indicates that the engine behind this growth comes from small, independent business.
Nevertheless, big organizations such as CNN are also exploring visual line-of-sight operations over people and safely using UAS for newsgathering in populated areas, as part of the FAA’s Pathfinder Program. PrecisionHawk is testing extended visual line-of-sight operations in rural areas, aimed at precision agriculture, and BNSF Railway is testing beyond visual line-of-sight (BVLOS) operations in rural and isolated areas for the inspection of rail system infrastructure.
Anti-Drone Systems. More recently, anti-drone systems have joined the party to help defend against unwanted UAV incursions into secure areas already protected by conventional systems like radar, acoustic and optical detection systems. Secure areas include prisons, government buildings/facilities, utility companies (including nuclear power stations) and airports. Sensofusion in Finland is one such company with its Airfence, one of three anti-drone systems tested last November by the FAA at Denver airport. The other systems were supplied by CACI International and Liteye Systems.
Kaveh Mahdavi, VP of Operations for Sensofusion, thinks that, relatively speaking, the UAV industry is quite mature — what’s still being developed are systems to enable autonomous drone flight. The regulations published so far only address ground-pilot-controlled operations, even though BVLOS testing is progressing well.
On the other hand, the maturity level of anti-drone systems range from proven to embryonic. As many as 50 companies with different technical solutions are vying to succeed in this new segment.
As the UAV segment continues to grow, so does the need for detection and prevention of drone incursions.
These systems employ three basic technologies: radar, optical and RF. Radar and optical need direct line of sight and cannot see over the horizon. That makes them quite short-range, and detection and defense has to be exceptionally quick to prevent unwanted UAV visits. The Airfence RF system is omnidirectional and can even detect UAS preparing for take-off up to six miles away, as demonstrated at the Denver airport.
Thus, intrusion warnings at a geofence distance of 3–4 miles can be generated, and automatic defense/prevention is readily achieved. Some utility companies want to have detection, warnings and control of intruder drones within a mile of their facilities.
Mahdavi described how Airfence uses a library of drone control RF signatures for all known UAS, with new signatures added regularly. The system can detect, intercept and directly take control of the offending vehicle.
During the Denver tests, Airfence initially only detected one third of the target UAVs, but the RF signatures of all targets were acquired.
Using remote engineering updates to the library, by Day Three all were detected. With lower prices, consumer drones are becoming a real threat for these sensitive areas.
The anti-drone industry will no doubt face considerable consolidation over the next couple of years, but Mahdavi feels that Sensofusion is well placed, with significant military and government business funding its growth — “securing the right contracts with the right customers,” as he says — without external investment.
Mature Company. General Atomics Aeronautical Systems Inc. (GA-ASI), makers of the well-known Predator, Reaper and other Medium-Altitude Long-Endurance (MALE) drone systems, has been in this business for almost 25 years. GA-ASI considers its products to be proven, mature and resilient for the military and government markets that demand them to be so. The company uses in-house products and technology across its range of air and ground systems.
In an effort to align with European customer interest, GA-ASI has been investing in a certifiable version of the Predator-B, recently named SkyGuardian. A derivative for marine applications will be known as the SeaGuardian.
Just as military transport aircraft want to transit through civilian airspace and, in order to do so, have been equipping with certified navigation systems for a number of years, military drone operators want to be compatible with Europe’s high-density commercial flight regulations and to operate within existing air-traffic control corridors.
To arrive in time for these European programs, GA-ASI has invested to get ahead of the market. This has entailed assessment of all on-board and ground components, and has led to upgrades and redesigns where necessary.
“Nevertheless, on existing product lines, there is a large degree of commonality across common systems on multiple platforms,” said Mike Cannon, VP of international programs. Common systems include datalinks, avionics, de-icing systems, and some airframe components.
GA-ASI has developed and integrated its own flight control system in its aircraft for more than 20 years. This has proven to be a key element of the success for the Predator family of products. Because all these systems have been flying for so long, they have become proven elements of their unmanned systems.
Hughes Network Systems Defense and Intelligence and Systems Division (DISD) has been selected by GA-ASI to provide satellite communications on the type-certifiable Predator B remotely piloted aircraft (RPA) system. Working with GA-ASI, Hughes will customize the aircraft’s satellite communications system with modified Hughes HM series modems. The advanced modems will enable a significant increase in data transfer rates, using an enhanced waveform that ensures resilient and secure communications when operating in challenging environments.
Big Players. It is very difficult for new start-up companies to enter this top-level segment of the UAV market. It’s very expensive to develop, demonstrate and prove large airframes, control systems and avionics that customers can rely on. GA-ASI has a unique position alongside major suppliers such as Boeing, Northrup Grumman, Israel Aerospace Industries, and Lockheed Martin. However, viable Chinese UAS are beginning to show up in the marketplace, apparently as a result of significant, focused investment.
Nevertheless, with an enviable position as a major supplier of platforms used in multiple applications, with sufficient internal resources to fund initial vehicle developments, GA-ASI has secured a large number of programs with multiple follow-on orders and funding for increasingly more capable derivative UAS. As the company now looks toward the certifiable segment using another internally funded product launch, it is again reinforcing its leadership position in its chosen unmanned market segment.
Small Vehicles. Meanwhile, the world of small unmanned air vehicles (sUAS) continues to thrive, given the release of FAA regulations last year, and the blossoming of many commercial applications using increasingly capable small multi-rotor drones. David Koetsch, CEO and co-founder of Aeryon Labs in Ontario, Canada, thinks the sUAS segment is also quite mature.
Aeryon has been around for more than 10 years, so it has also had time to prove its platforms and internal systems. It also builds its own flight-control hardware and software, affording substantial power savings and longer endurance from automatically managing rotor speeds.
“The quad platform has been around since 1938, so the concept is hardly new; however, over the last decade, Aeryon Labs has substantially matured and ruggedized our platform, the Aeryon SkyRanger sUAS,” Kroetsch said.
The company’s focus is on not only on the UAV platform, but also in supplying complete systems meeting different customer needs. With electro-optical and thermal imaging camera payloads and an onboard georeferencing data collection/processing system, it provides integrated solutions such as AeryonLive Video and Telemetry and AeryonLive Fleet Management using real-time software tools.
For the oil and gas industry, providing compatibility for off-line flight planning software inputs and importing compatible aerial imagery into existing GIS systems is a significant feature. The SkyRanger UAS has benefited from many years of use in the field, and has been designed with modularity and ease of use with snap-on/off parts that make set-up and operating in bad weather a lot easier.
Aeryon’s business is currently 50% military, 25% oil and gas and 25% public safety (such as rapid traffic accident data gathering). Other entrants to these segments might find it easy to put together an unmanned system from parts bought on the internet; what comes considerably harder is proving reliability and interoperability with existing customer systems.
Actually, to develop an industrial-grade UAV takes lots of investment and requires experience gathered over many years. Customers have learned how to differentiate between those dabbling in the market and those with serious capabilities.
Consolidation. Consolidation is inevitable in this market segment — perhaps within the next six months, certainly over the next two years — because there are so many companies trying. Investment for these start-ups is getting harder to find, and it may be too late for most, as the leaders are already well established.
“It’s essential to pick a niche within the increasingly competitive UAV industry,” Kroetsch said. “This is why Aeryon chose early on to focus on enterprise-level offerings in commercial, public safety and military.”
Recall what happened to 3D Robotics. Even though 3D Robotics raised many millions in funding, its Solo quadrotor fell from grace, perhaps due to continuing design issues and being higher priced compared to rapidly declining DJI Phantom 3 prices. “Competition and consolidation look to be very similar to that which happened with digital cameras,” Kroetsch said.
For Aeryon, being Canadian appears to be an advantage, as U.S. export regulations seem to be handicapping U.S. drone manufacturers. Aeryon sells in 35–40 countries because its product does not contain military-restricted components and only uses commercial parts. Canadian regulations for drone system exports do not prohibit worldwide sales for such products, while U.S. regulations can be difficult for U.S. suppliers to negotiate.
Nevertheless, unexpected hurdles to adoption still exist, such as company policies related to health and safety, union restrictions, and potential internal clashes on responsibility for implementation. But with 100% test, and a hardened design for tough environments, Aeryon sees itself well positioned to grow in its chosen industrial sector.
This has been a brief overview of the UAV/UAS industry — a first try, if you will. Nevertheless, it’s a summary that we can use as a benchmark for where we are right now, and a departure point for future growth.
We have quite mature capability in both large and small UAS, with integration focused on flight-control and navigation systems. The larger UAS enjoy a relatively mature market with established suppliers of lower numbers of expensive systems, while the sUAS segment is larger, younger and less expensive, with fewer barriers to entry.
Nevertheless, the mature industrial segments with harder, more integrated requirements make it difficult for new entrants to climb the steps into more complex commercial operations. The recreational segment is dominated by DJI, and it remains strong with well-performing, easy-to-operate drones.
Because of the ease of access to smaller drones, despite FAA and other countries’ regulations, people seem to want to penetrate secure facilities like utilities, airports, military bases, prisons and other government locations. Therefore, anti-drone systems using optical, radar and RF are becoming available, and facilities are being equipped to prevent unwanted drone incursions.
AUVSI XPONENTIAL. In May, I’ll be roving the show floor at the XPONENTIAL show in Dallas, and I welcome your added insight, from all corners of the UAV industry. We will continue this assessment in an upcoming
Professional OEM + UAV newsletter column (subscribe free at gpsworld.com/subscribe).