Investing in Drones.
How to win when investing in flying robotics?
This post was inspired by the recent global Consumer Electronics Show in Las Vegas, which was covered by many equity analysts and reporters across the world. The bad news – having scrutinized circa 270 exhibitors in ‘robotics’ category I didn’t find much truly exciting. Most of the companies presented merely various applications of existing technologies. The good news – many analysts did pay attention to the passenger drone presented by Guangzhou-based Ehang
and that made me think of pros and cons of investing in drones. Here we go!
Drones are wonderful and exciting, they literally make people smile (me at least). They make picturesque videos for their owners, perform in championships and faithfully serve in military.
What are they from investment perspective?
It is important to be aware of the present and future of drone’ elements, meaning:
a motor, a battery, gyroscope&accelerometer and transistors/semiconductors.
Since the invention of a brushless motor it became possible to produce super lightweight, mobile, maneuver flying solutions of various kinds. A brushless motor was a truly great invention and its capacitance per unit has increased dramatically over the last decade. Still, it is a very well known (!) solution that allows almost anyone to assemble a drone — the compartments have become cheap and easy to get.
Hardly any consumer product producer can grow into a giant and conquer the market with it.
One of the most noticeable deals, however, in consumer drone world of 2015 was quite big: 3D Robotics raised $64 mln to accelerate production and further development of their drones. A powerful claim for market domination, but A – you might be late for North American market - the big deal is closed now, B – I believe that today one could only reach extensive profits on the new and unique pieces of technology that a drone will be carrying on (i.e. high precision scanners, sensors, manipulators, etc.) and hence the new functionality that it will be able to perform, not the simple drone itself.
What for drone accumulators, they have become tiny and mighty indeed. Still an expensive consumer-level drone on a lithium battery with a camera on can fly (and land safely) for not much longer than 10 minutes and up to c. 23 minutes with no camera.
While new, more powerful versions of lithium batteries are on their way, physicists also hope to make a revolution in energy carriers field following an amazing discovery of plasma crystals (ionic crystals) by a team of Russian and German scientists on the International Space Station in 2011. The result of the experiment became the final proof of the possibility of creating new surfaces of substances used, among other things, in accumulators; surfaces capable of storing gigantic loads of energy, a lot more than lithium battery electrodes’ surfaces can. The higher electric change – the higher energy absorption capacity. Plasma crystals’ energy content is predicted to go 2–3 orders of magnitude up compared to gasoline (!!), and that would change everything on Earth, and robotics first.
The two remaining drone enabling components: MEMS (i.e. INS and GPS) and semiconductors/transistors have gradually matured over the last few decades and became affordable.
The last but not the least: drones start to introduce new ethics into our lives as they allow violating privacy easily. It can be nasty and in some countries they are already trying to put some limits on using drones. In the US for example, you would have thought – one of the most forward-minded countries from innovation and entrepreneurship perspectives – more than 20 states have already prohibited one or the other way of using drones. Today drones that guard protected sites can hunt down and catch fellow fliers with a net – watch.
Military drones are a different story. Armies of the USA, UK, France and Israel have many thousands of big and small unmanned aircrafts and are planning to increase their number and functionality. Their drone producing contractors will enjoy a guaranteed and growing demand.
- It is the unique technologies that a drone will be carrying on that are going to provide a revolution in drone tech and bring high profits. Therefore look for innovation in high precision scanners, sensors and manipulators and collaborations with drone producers.
- Power industry is at the brink of a revolution and robotics will be running along.
- Military drone producers are going to grow in the nearest future, but it might be already late to invest there.
By the way, here is a very useful source for those who are interested in drone tech – http://dronecenter.bard.edu/
In the next post, I will take a closer look at Kuka, a well-known producer of industrial robots . Will try to examine how their vision and achievements are affecting their financial performance.