Bill Carey

The August effective date of the FAA’s Part 107 regulation for the commercial use of small unmanned aircraft systems capped a consequential year for both the commercial and consumer drone markets. Summarized below are some noteworthy developments, ironies and observations.
Action camera company GoPro was officially “stoked” when it unveiled its new Karma foldable quadcopter on September 19, but the enthusiasm proved to be premature. Just over two weeks after Karma hit the market on October 23, GoPro recalled some 2,500 units, explaining that “a very small number” of customers had reported incidents of Karmas losing battery power while flying.
With its share price on the Nasdaq exchange already in freefall over poor third-quarter earnings blamed on production problems with the Karma and its new Hero 5 camera, GoPro in November restructured its operations. The San Mateo, California&nbsp;technology company cut 200 jobs—about 15 percent of its workforce—and closed its entertainment division.
In April 2015, 3D Robotics of Berkeley, California, unveiled its first consumer drone offering—the Solo quadcopter. Late to the market, occasionally unreliable and initially deprived of its camera gimbal because of production delays, the Solo stumbled in dethroning the dominant DJI Phantom and dragged down its maker in the process. “In 12 months, the company has gone from an industry-leading U.S. drone start-up to an organization struggling to survive—the result of mismanagement, ill-advised projections and a failed strategy that relied on a doomed flagship drone,”&nbsp;Forbes&nbsp;reported in October. “As a result, 3D Robotics has laid off more than 150 people, burned through almost $100 million in venture capital funding and completely changed its business strategy.”
The company co-founded by&nbsp;Wired&nbsp;magazine editor and drone evangelist Chris Anderson now focuses on selling an “aerial analytics” software platform for the construction industry called “Site Scan,” which uses the Solo fitted with a professional-grade Sony UMC-R10C camera to collect imagery over building sites.
When considered in the context of the evolving commercial drone industry, the GoPro and 3DR examples belie the proposition that it’s all now about sensors and big data, and that drone design, manufacture, distribution and airworthiness are second nature. Even Shenzhen, China-based DJI, the heavyweight of the small drone industry, experienced delays in ramping-up production of its new Mavic Pro foldable quadcopter, which was poised against the GoPro Karma and released to market at roughly the same time. In early November, DJI issued an apology to customers who had pre-ordered the $1,000 drone and promised to do better.
Social media and networking site Facebook hit a speed bump at an early stage with a different kind of flying machine—the solar-powered Aquila airplane that will someday close gaps in global Internet coverage by channeling lasers in the stratosphere, or so the theory goes. On its&nbsp;<a href="http://www.ainonline.com/aviation-news/aerospace/2016-07-21/facebook-reveals-first-flight-solar-powered-aquila-drone">first flight as a full-scale aircraft</a>&nbsp;on June 28, the Aquila was substantially damaged when its right outboard wing failed on final approach to Yuma Proving Ground in Arizona. At 20 feet above the ground, the autopilot corrected for a wind gust, leading to downward loading of the wing that exceeded its structural limit, according to a National Transportation Safety Board finding released on December 16.
The past year saw a number of drone-delivery demonstrations. In September, the Alphabet Inc., subsidiary formerly known as Google X—now just X—rolled out its Project Wing vertical takeoff and landing, fixed-wing prototype to deliver Chipotle burritos to students at Virginia Tech university in Blacksburg, Virginia. The Mid-Atlantic Aviation Partnership, one of six FAA-designated unmanned aircraft test sites, coordinated the effort.
That month, Project Wing leader Dave Vos represented X at the first meeting of the FAA’s blue-ribbon&nbsp;<a href="http://www.ainonline.com/aviation-news/aerospace/2016-09-16/us-east-west-converge-drone-advisory-committee-meets">Drone Advisory Committee</a>. But by October, Vos, who brought aviation-industry acumen to the endeavor, was gone—reportedly forced out over “conflict between the group’s engineers and its commercial team,” the&nbsp;Wall Street Journal&nbsp;reported. According to&nbsp;Bloomberg Technology, the shake-up was “part of a broader Alphabet effort to rein in spending and try to turn more experimental projects from loss-making risky bets into real businesses.”
Online retail giant Amazon announced on December 14 that it had completed its first drone delivery in a “private trial for customers” one week earlier; the on-line retailer flew a package containing an Amazon Fire TV streaming media player and a bag of Proper Corn sweet and salty popcorn to a homeowner in Cambridgeshire, UK. “We will use the data gathered during this beta test and the feedback provided by customers to expand the private trial to more customers over time,” Amazon promised in a video. “We’re starting with two customers now, and in the coming months will offer participation to dozens of customers living within several miles of our UK facility and then growing to hundreds more. After that, well it would be easy to say, ‘the sky’s the limit.’ But that’s not exactly true anymore, is it?”
Maybe not; but there are limits to the sky. At least in the U.S., package delivery by drone at other than remote or experimental locations remains a distant dream until operators crack the challenges of airborne collision-avoidance, flights over people and beyond visual line-of-sight operations to the FAA’s satisfaction.
MarketWatch&nbsp;writer Sally French, blogging as&nbsp;The Drone Girl, derided what she called the “hype machine” behind Amazon’s and other such announcements. “There are many roadblocks to drone delivery, from improving battery life and weight capacity, to sorting out sense-and-avoid, to combating the public’s idea that we can just shoot drones down,” French wrote. “[T]he issue here is that despite loads of press celebrating every ‘first drone delivery milestone,’ drone delivery hasn’t come much farther than the first documented drone delivery—TacoCopter in 2011.” My own two cents is that Amazon and Google notwithstanding, drone package delivery will become reality only upon implementation of a low-altitude air traffic management system à la the&nbsp;<a href="http://www.ainonline.com/aviation-news/aerospace/2016-04-24/nasa-faa-test-sites-conduct-largest-drone-management-test">UTM concept</a>&nbsp;NASA is developing, plus an airspace and spectrum licensing regime involving the FAA and the Federal Communications Commission.
As 2016 expired, some revisionist thinking was taking hold in the commercial drone space. Memorably, at the Interdrone conference in Las Vegas in September, Lux Capital partner Bilal Zuberi dismissed as “complete BS” the findings of a 2013 economic impact study the Association for Unmanned Vehicle Systems International commissioned—though that study continues to be cited at industry events. It found that drone applications in farming would represent the lion’s share of $82 billion in revenue through 2025, but it is apparent now “agriculture is nowhere near as dominant” as originally thought, Zuberi said.
A comprehensive study of drone sales by Skylogic Research of Redwood City, California, found that both hobbyists and professionals acquire drones primarily to take film, photos and video. The second leading commercial driver was infrastructure inspection, followed by surveying and mapping. Farming applications represented a single-digit percentage of the demand.
The “Drones in the Channel” report, which was based on interviews with major manufacturers and distributors, plus an online survey of 780 drone users, determined that DJI commands about 50 percent of the North American market for drones—not the 70 percent commonly thought. Where the Chinese manufacturer dominates is in the sale of machines costing from $3,000 to $7,500, with 67 percent of market share. &nbsp;
In a recent&nbsp;Drone Radio Show&nbsp;podcast, Skylogic CEO Colin Snow said he was more disappointed than surprised by the latest research findings. “The industry visionaries continue to over-hype some of the future capabilities of drones,” he said. “We think the number-one misconception in the drone industry is how fast it will grow and which sectors will grow and which ones will lag. Widespread adoption isn’t going to go gangbusters over night.”
The long-awaited release of the FAA's Part 107 regulation,&nbsp;<a href="http://www.ainonline.com/aviation-news/business-aviation/2016-08-29/faa-issues-76-waivers-part-107-drone-rule-takes-effect">which became effective on August 29</a>, lends much needed “certainty” to the commercial drone industry, Snow asserted. As this writer chronicled in “Enter the Drones: The FAA and UAVs in America,” also released this summer, Part 107 was the result of&nbsp;<a href="http://www.ainonline.com/aviation-news/blogs/ain-blog-story-behind-part-107-small-uas-rule">multiple drafts</a>&nbsp;dating back more than a decade. Three months after the rule's effective date, the FAA said it had processed more than 12,000 applications for remote-pilot certificates. At the first-year anniversary of the FAA's national drone registry on December 21, some 616,000 people had registered to fly drones for fun.
“For the past 10 years, businesses operated with uncertainty about the regulations around the commercial use of drones. We now have with Part 107 a real clear set of rules and a roadmap for further regulations,” Snow said. “When companies are uncertain about the future, about things like pending regulation and taxes and customer demand, etc., they tend to hold off on investment and markets languish. But that’s completely changed this year.”

AIN Blog: Drone Year Retrospective, Uncertain Karma

There were fits and starts with both consumer and commercial drones as the FAA's Part 107 regulation brought much needed definition.

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