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An Update on Commercial Drones #AUVSI2017

An Update on Commercial Drones #AUVSI2017

If artificial intelligence is the brains, then robots are the brawn in the future of work.

Earlier this week, we attended the AUVSI XPOENTIAL trade show in Dallas, the largest global gathering of unmanned systems providers, robotic software developers, and industry experts.

We sat down with 13 executives from some of the leading commercial drone companies. Here are the takeaways from our meetings:

  • We’re Still in the Early Innings of Drones. Overall demand for drone hardware, software, and services continues to see strong momentum domestically and internationally. Industry leaders are confident that the market potential in core verticals remains deeply unsaturated. Increasing customer awareness around the efficiencies of drone technology represents a catalyst for accelerating industry growth.
  • Ground Robots and Drones are Complementary. Terrestrial robots and aerial robots (i.e., drones) should not be considered competitive offerings. Some of our favorite strategies in the space couple ground robots with drones for autonomous services.
  • Drone Delivery is Real. Throughout our meetings, robotic delivery of packages was identified as one of the largest untapped markets. Most industry leaders do not expect regular drone delivery to be viable for 5+ years; however, that’s a meaningful uptick from last year, when a similar group did not expect drone delivery to be realistic for 10+ years. Amazon is leading the way in the drone delivery space, but will likely acquire enabling technologies to make it a reality.

  • Deregulation is Key. Further deregulation is needed to take the drone industry to the next level. The FAA’s Part 107 significantly deregulated the commercial drone market and provided a meaningful catalyst to the industry, but additional legislation is needed to allow drone flights beyond the operator’s visual line of sight. This would expand the number of locations where drone flights are allowed. Another regulatory imperative is implementing a nationwide unmanned traffic management system.
  • Consolidation Will Continue. Industry consolidation has been a common theme over the last two years and leaders in the space expect this trend to continue. Consolidation will likely include smaller company acquisitions or mergers, as well as Fortune 500 companies entering the space.

We asked each executive we met a set of six questions to better understand the trends driving or holding back the commercial drone industry.  Here are the aggregate responses to our 6 questions:

  1. What’s the biggest limitation holding back the industry? Unsurprisingly, most drone executives highlighted regulation as the primary industry headwind. Customer awareness, product understanding, and a lack of actionable applications with drone-collected data were also common answers.
  2. What U.S. government regulation is holding back the commercial drone industry the most? Five executives mentioned the restriction of drone flights beyond visual line of sight (BVLOS). Prohibiting flights over people, allowing only one drone to be operated per pilot, and limiting the number of locations drone flights can take place were also identified as large regulatory headwinds. Companies that perform drone services for infrastructure inspection, construction, and mining indicated that regulations are not holding the industry back, because most of these operations are performed within the line of sight.
  3. When will flights beyond visual line of sight be deregulated? Almost everyone agrees that BVLOS flights will not be fully deregulated in the next year or two. On average, most experts think the industry will see BLVOS deregulated in 2020. A few sources indicated that the FAA may implement a process in 2018 that would streamline the application process allowing users to fly BVLOS.
  4. What is the biggest technical challenge you need to solve? While answers varied based on company focus, common technical challenges include sensor integration, battery performance, onboard computing capabilities, and computer vision capabilities.
  5. What is the biggest untapped market or use case for drones that you see? It was broadly acknowledged the largest untapped market remains the core verticals many of these companies are currently focused on: oil & gas, construction and mining, agriculture, and utility inspection. Several companies also highlighted package delivery as the largest market opportunity.
  6. Ground robots will be better than aerial drones for what applications? Most experts think terrestrial robots are better suited for applications that involve carrying heavier payloads or taking direct action (e.g., bomb disposal or pesticide dispersion), and most experts view these two robots as more complementary than competitive. For example, terrestrial robots can be used to carry multiple aerial drones to a central work location. Ground robots can also perform maintenance on drones, change components, or swap their batteries.

Disclaimer: We actively write about the themes in which we invest: artificial intelligence, robotics, virtual reality, and augmented reality. From time to time, we will write about companies that are in our portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.

Artificial Intelligence, Audio, Loup Ventures Podcast, Robotics
3 min. read Show less
Feedback Loup: Snapchat Announces Diminished Reality

Feedback Loup: Snapchat Announces Diminished Reality

On Tuesday, Snapchat rolled out new features to its platform, including an infinite snap timer, looped videos, emoji drawing, and a magic eraser. With the new snap timer and looped videos, recipients will now be able to see a picture or video until they choose to exit the snap. Once the recipient exits the snap, it is deleted. These are nominal improvements but they show the direction and emphasis of Snap’s R&D as well as it’s technical chops in the field of Augmented Reality.

We are most excited about the Magic Eraser feature, an example of Diminished Reality. The Magic Eraser allows users to remove objects from a photo, by scanning the surrounding colors and filling in over a selected area. Let’s play a quick game of Photo Hunt. How many changes do you see?

If you guessed the number five, you’re correct. In the second picture, the cup and MacBook Pro are missing. However, so is the air vent near the ceiling, the backpack strap, and the adjacent desk’s leg to the right. While the Magic Eraser isn’t perfect at removing objects that are the focus of the picture, it does a great job of removing objects in the background that people typically glance over.

Augment CMO Lindsay Boyajian previously wrote about Diminished Reality (DR), a concept in which the physical world is diminished virtually. Snapchat’s Magic Eraser is a perfect example of DR in use. While AR allows us to overlay content on the real world, DR allows us to remove content from the real world. We expect to see much more DR experiences in the next year, as the combination of DR and AR results in a strong Mediated Reality offering. Mediated Reality will ultimately result in a better user experience than AR or DR alone. Snapchat’s combination of both technologies further solidifies its position as a camera company.

Disclaimer: We actively write about the themes in which we invest: artificial intelligence, robotics, virtual reality, and augmented reality. From time to time, we will write about companies that are in our portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.

Augmented Reality, Feedback Loup, Snapchat
2 min. read Show less
Facebook Planting A Flag In AR

Facebook Planting A Flag In AR

Facebook reported Q1 earnings last night and briefly discussed its augmented reality and virtual reality efforts on the call. Following the trend of F8 last month, CEO Mark Zuckerberg spent more time talking about augmented reality than virtual reality. Zuckerberg reiterated that the camera is the focal point of near-term AR and made it sound like Facebook is unashamedly taking a page out of Snapchat’s playbook as a “camera company.” Facebook’s opening up of the camera to third-party developers is a play to establish the company as the platform where AR developers go to create applications, although we believe that Apple and Google’s ownership at the OS layer will enable the richest application development.

Zuckerberg also highlighted computer vision applications beyond the type of facial manipulation that is so popular in social now. He mentioned the ability of the camera in Facebook to recognize objects in the real world and then give the user the ability to interact with them to receive information or even make a purchase. Facebook, like Google and Apple, should have a real play in object recognition, but the interesting thing about this concept is that it expands the use cases of Facebook beyond communication.

The reason that filters and facial masks work well in social is because they’re meant to be shared. Using the camera within Facebook or Instagram to get product information or make purchases is a departure from the core use case of the platform. It will be interesting to see how Facebook’s vision differs from Google’s given their natural play on organizing the world’s information.

While we expect Facebook to keep investing in both platforms, the slight tone shift says that Facebook intends to be a major player in AR despite being late to the game.

Disclaimer: We actively write about the themes in which we invest: artificial intelligence, robotics, virtual reality, and augmented reality. From time to time, we will write about companies that are in our portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.

Augmented Reality, Facebook, Virtual Reality
2 min. read Show less