Drones

TECHNOLOGY, MARKET AND REGULATION DRIVING UNMANNED AIRCRAFT

IT’S TIME FOR

DRONES 01 04

Drones conquer the skies

Drones that let entrepreneurship take flight

02 05

SERIE INNOVATION TRENDS

Who's leading the drone market?

INFOGRAFÍA

Universo drones

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Canarddrones: a Spanish company offering airport drones

01 Drones conquer the US skies New US legislation eases the law applicable to unmanned aircraft, although questions of the security and privacy of commercial operations that use drones to deliver products remain up in the air.

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The US skies are opening up to drones for commercial use. The United States has announced new regulations applicable to unmanned aircraft. On June 21 the Federal Aviation Administration (FAA) published new rules applicable in the United States that greatly reduce limitations on drones weighing less than 25 kilos.

Previously, drone users had to have a pilot's license and request flight authorizations.

Now these requirements have been lifted: drones will have to be registered and users will

have to pass a skills test every two years. Authorization will still be required in sensitive areas, particularly those located close to airports, but the Administration has undertaken to respond to applications within ten days.

Drones for commercial use will have to fly not higher than a maximum limit of 122 meters (400 feet) (compared with the 150 meters in France or 120 meters in Spain), and remain within the operator's line of sight without moving over densely populated areas.

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The announcement of this regulation has been well received by all the parties involved. "I regard it as a significant milestone," said Brian Wynne, president of AUVSI (the Association for Unmanned Vehicle Systems International), which represents the main companies in the sector. "This is just the beginning of this process. And obviously we're going to continue to work closely with private sector entities... because the President has made clear that the future success of our economy will depend on our ability to continue to innovate," highlighted Josh Earnest, President Obama's Press Secretary.

However, the new rules do not

mention the question of deliveries using drones.

Amazon, Alphabet (formerly Google), Walmart and the Chinese company Alibaba have major projects underway and the FAA has already awarded licenses for some of these companies to carry out tests.

The White House has noted that talks are already being held to develop regulations in this area.

The FAA has more or less opened the door by indicating that the procedures for obtaining a waiver (the government agency has already granted thousands) will be simplified. In fact, currently it would be premature to legislate on the question of drone deliveries. The operators still

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do not have a system of automated management of low-altitude air traffic, on which NASA is working with multiple startups. They have still not been developed for major distribution companies.

The rules also do not deal with the issue of security and privacy, which as this editorial in The New York Times notes, is a matter of concern: “But as drones have become smaller, cheaper and more numerous — some popular consumer models sell for less than $1,000 — policy makers have had to address potential problems. These machines can obviously be put to good use - say, inspecting cellphone towers, shooting movies or compiling multidimentional real-estate portfolios. They can also be used to snoop on people and harass them. And they can threaten other aircraft."

The US daily highlights that "some regulation of the private and commercial use of drones thus seems inevitable. The task for regulators is how to protect

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privacy and promote safety without infringing on the First Amendment rights of citizens and businesses that wish to use drones for legitimate purposes, like photography or news gathering."

It notes that "many privacy advocates are also worried that drones used by businesses will collect information like wireless signals emitted by cellphones that could be used to determine people’s locations. One marketing company did just that last year in Los Angeles." Nevertheless, it points out that "The public’s desire for clear rules is understandable. Still, policy makers should not make it so difficult to use drones that they end up limiting the First Amendment rights of filmmakers, activists and journalists.”

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Who's leading the drone market?

Commercial drones are taking over the market. The first barrier –price– is now disappearing, thanks to interest from companies and consumers.

The figures bear out the attraction of unmanned aircraft: deliveries of drones to consumers all over the world is expected to exceed 7.3 million in 2016 and to hit 29 million by 2021.

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United States is the largest potential market for commercial unmanned aircraft, followed by Europe and China. Paradoxically, the US has historically trailed behind Europe in terms of drone uptake, due to the slow progress of its regulations.

Europe had over 2,500 commercial drone operators in July 2015, compared to 1,000 in the United States.

BI Intelligence expects the sales of drones to reach 12 billion by 2021.

That implies a compound annual growth rate (CAGR) of 7.6%, up from 8.5 billion in 2016.

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What are the keys to this boom?

Which companies lead the market?

Price is a determining factor.

Low-cost toy drones are gaining in popularity for recreational uses. In the US, the Consumer Electronics Association (CEA) reports that 700,000 drones were sold last year, up 63% from the year before.

In 2015, the consulting company Frost & Sullivan estimated that DJI, headquartered in China, had a 70% share of the market for commercial and consumer drones. Their Phantom are right now the most popular drones in the world for both commercial and consumer uses; they are known for their reliability and their excellent photography and video capture. Although DJI estimated revenues of more than one billion dollars for last year, several smaller players are seeking to undermine the dominance of DJI:

BI Intelligence predicts that the deliveries of consumer drones all over the world will exceed 7.3 million in 2016, making them very nearly a product of general consumption.

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• 3D Robotics, a startup headquartered in California, last year launched its Solo drone (for 800 dollars) for commercial and consumer applications.

It has high on-board processing power and can autonomously carry out complex flight maneuvers.

For example, users can make the drone perform a 360° turn, circle an object, or turn backwards and forwards by simply pressing a button on the remote control. However, it doesn't include a camera, although users can install a range of compatible cameras.

• Lily, also headquartered in California, this year won an innovation award at the Consumer Electronics Show (CES) for its drone Lily (priced at 1,000 dollars). The company last month announced it has 60,000 orders for its unmanned aircraft, for a total amount of 34 million dollars. The small drone makes videos autonomously, while it moves around the user with a small location device.

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• Yuneec offers a series of high-end drones that compete with DJI's Phantom 3 series. The Hong Kong manufacturer is making significant efforts to give its unmanned aircraft more autonomous flight capability. For example, it announced at the CES that the company's Typhoon H model (priced at 1,700 dollars) will be equipped with Intel's Realsense technology to avoid obstacles. What's more, the company announced it would be the first unmanned aircraft manufacturer to install Qualcomm's new Snapdragon flight chips. The chips offer support for autonomous navigation and detecting obstacles and help flight autonomy.

• Parrot, a startup based in France, specializes in low-cost unmanned aircraft for enthusiasts and beginners. Loro has several toy drones without cameras, and late last year it also launched the Bebop 2 (at 550 dollars), a new light version of their camera-carrying drone. It also unveiled its fixed-wing Disco drone at this year's CES, which takes off simply by throwing it in the air and can land on the ground unaided, making it easy for beginners.

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The GoPro action cameras are the most popular camera models installed in 3D Robotics drones.

GoPro plans to launch its own unmanned aircraft, Karma, in late 2016. GoPro has published very few details about the new model, but it will probably offer 4K video capture like many of its competitors' drones. It may also have the capacity to record 360° videos, which would set it apart from its competitors. The

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recognition of the GoPro name will probably help the company quickly make a space for itself in the consumer drone market.

All the models are able to capture aerial videos and photographs, unlike the smaller toy drones that can only fly. That makes them very popular for both consumer applications and video surveillance drones for companies.

Another point worth noting in that there is now an overlap on the market between commercial and consumer drones. For example, the DJI's Phantom 3 drones are popular among professional photographers and consumers who take personal videos and photos.

In 2014, according to ABI Research, camera drone models accounted for almost 70% of the

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unmanned consumer aircraft market. This market has attracted interest from Intel and Qualcomm –two of the largest manufacturers of chips in the high-tech industry.

Both companies offer hardware and software components for drones, including computer chips designed to help process images. They also provide cameras –such as Intel's Realsense– which are capable of scanning the drone's surroundings in seconds to help it avoid obstacles.

There is no doubt that the golden age of drones is dawning.

03

Canarddrones: a Spanish company offering airport drones Created six months ago, the startup believes that the drones will replace aircraft in airport runway calibration operations.

Two red and two white lights on the runway. These are the colors pilots need to see when they land and which let them know that their descent angle is correct. This lighting system is

periodically checked for faults in airport runway calibration operations. The runways are closed so that the aircraft can run simulations to check that everything is in working order.

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This operation is currently carried out by a manned plane.

The Spanish startup Canarddrones hopes that aircraft will be replaced by drones.

With a degree in computer engineering and an MBA from the IE business school, Jorge Gómez kicked this idea off one year ago. He persuaded Ana Pérez (aeronautics engineer), Rafael Aguado (computer engineer) and Juan Díaz (telecommunications engineer) to build a drone that could perform runway calibration operations.

"We realized that calibration was extremely expensive since it involves an aircraft, a pilot,

closing the runways... And that there was the possibility of using drones. We built the prototype in three months. The drone simulates the aircraft. It stands in front of the lighting system at the top of the runway and checks whether everything is okay or whether the lights need to be adjusted," explains Juan Díaz, the startup's CTO. Ana Pérez, CFO, stresses that the operation's cost is reduced: "Using aircraft costs 3000 euros an hour. If you use a drone, you don't pay the pilot and crew from an hour's work, and you don't pay for moving the aircraft between airports for calibration, etc. Using the drone means flexibility."

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According to this aeronautics engineer with over 10 years of experience at Airbus, "What's new is moving from a classical, well-known procedure that's been used for a long time to applying a new way of working which is advantageous at all levels: it reduces time and costs and increases flexibility."

The startup Canarddrones was formed six months ago and in that time it has released one prototype and is about to launch the second one with 28 minutes of flight time. Díaz points out that "the drone is not the star of the project. There are three main players: the drone; the software (analyzes

all data: sent from the drone, the positions, camera footage, etc.); and, last but not least, the operation's definition since we are talking about developing a procedure that currently does not exist."

According to Ana Pérez, "the drone itself is a product" and, for this reason, they are knocking on the door of all operators and presenting the project. And even though these two experts agree that the pace of the airport world is slow, they have not sensed any fear from the pilots. Also, AENA is interested in the project and they believe that a public tender will soon be called.

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In the meantime, they are targeting Holland, where they have run trials at the airport of Lelystad. Also, they have been selected by the accelerator startupbootcamp and have received 100,000 euros in funding to date (50,000 euros from the European Space Agency and 50,000 euros from Finodex). The next step is to win the first contract and be able to start working in several airports. "Drones are the future.

I don't have anything against pilots but this is the future," concludes the aeronautics engineer.

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Drones that let entrepreneurship take flight Drones are becoming an everyday tool. They are easier to handle, legislation is slowly beginning to create a space for them, and there is a great variety available on the market for a range of budgets. Can unmanned aircraft benefit small startups?

Some of the benefits offered by drones for boosting entrepreneurship:

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Make a corporate video with aerial shots Corporate videos are always a good form of promotion. They can give your business a fresh and modern image that attracts people more emotionally than rationally. Including aerial shots in a video shows a panoramic view of the environment where your business is located: for example, you can see if it is surrounded by green areas, is a developing part of the city or is an innovation zone. Using aerial shots can be seen as a good sign that you are up-to- date with the latest

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trends and the most innovative narratives.

If your business is related to audiovisual production, having a drone allows you to offer a service for which demand is actually growing. You can record original scenes or sell shots that you have pre-recorded and offer them as an image bank, a resource that is very commonly used by the media and advertising agencies.

Broadcast live Video, in particular live video from mobile devices, is one of the key trends of the moment.

If to this you add the attractiveness of the aerial shots a drone can take, you will have a powerful tool in your hands.

Platforms such as YouTube and the Facebook Live API allow you to broadcast directly from different devices, including drones, as Mark Zuckerberg himself did during the most recent conference of Facebook

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developers. Direct broadcasts from events such as conferences and innovation or entrepreneurship fairs are a good way of attracting potential customers or allies.

Mapping tool Drones are being used more to observe land.

Using a drone can be very useful for getting a clear idea of the location of your business and its surroundings or for preparing plans. If you work in sectors such as agriculture, a drone can be a good way of monitoring land, plantations or livestock; in the industrial sector it can be useful to get a view of the machinery or the different parts of the company.

Promotions Drones are being used to make drops of all kinds of items, from bombs to food, medicine and lifesaving equipment. What if you used them to distribute promotional material? This could be an attractive and inexpensive way of distributing these kinds of goods, as without doubt it is unusual and attracts the attention strongly in events such as fairs, congresses or exhibitions.

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Prepare for the era of the mini drones Although for legal and logistical reasons home deliveries using drones have not yet been deployed, everything suggests that in the medium term this service will become a reality. Companies such as Amazon, DHL and UPS have for some time been experimenting with the best way of doing this on a large scale, and little by little lawmakers are looking more favorably at an expansion of these kinds of services.

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On a smaller scale, another type of business is already looking for a way of using drones. This is the case of a chain of hamburger outlets in Colombia, which announced a new "mini drone" service, though because of the current legislation in the country, they have not been able to implement it.

Entertainment Just like executives in large corporations close million-dollar deals while they play golf, you can take advantage of the drone hobby to relate to other people and have a pleasant time while flying drones, racing them, identifying possible business opportunities or networking.

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05/INFOGRAPHIC The drones universe Unmanned aircraft are taking over the skies: the figures, keys, market outlook and applications in this booming technology sector.

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Key points

Sales of drones will hit 12 billion dollars by 2021..

700,000 drones were sold in the United States in 2015, up 63% from the previous year.

United States is the largest potential market for commercial unmanned aircraft, followed by Europe and China.

The forecast is for over 7.3 million drones to be delivered to consumers all over the world in 2016 and for this figure to reach 29 million by 2021.

The new regulations will allow new uses for drones, such as Amazon's long-awaited first airborne delivery service.

Government uses: military and public security camera for combat missions, and helping emergency staff in dangerous situations or on inaccessible terrain.

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The market Estimated investment in drones (in billions of dollars) Government $14 $12 $10 $8 $6 $4 $2 $0

2015

Consumers

2016

Medium-sized companies

2017

(in billions of dollars) (in millions)

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2018

2019

2020

2021

Corporate The drone market is expanding, with new models aimed at different segments of the consumer and commercial market, which often overlap. These are the market leaders: Lily , Yuneed, Parrot, GoPro…

Main industries using drones

42,6% Fotography 20,7% 10,9% 8,6%

%

8% 8,9%

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Real Sstate Publics Services Construction

Agriculture Others: - Education - Manufacturing - Emergency - Insurance - Administration

Government use The government market for unmanned aircraft can be divided into two different applications: military, and the new and growing use of unmanned aircraft for public security.

Main countries exporting military drones (Percentage increase between 1985 and 2014)

Canada 6.4%

Russia 1.9%

France 1.6% US 23.9% Israel 60.7%

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