Inside the 117% increase in Drone Sales in 2016
A study was released this month by The NPD Group, stating that U.S. dollar sales of drones more than doubled in the 12 months ending February 2017, with a 117 percent increase year-over-year. In this article I’ll break down some of the reasons for this increase, and discuss the technological innovation fueling the industry. I will focus primarily on the units priced above $300. Drones in this price range account for the lions share of revenue from drones, and the category’s growth shows no signs of abating.
During the first two months of 2017, drones with a price tag over $300 drove 84 percent of dollar sales and nearly 40 percent of unit sales.
There has always been a mental barrier to many users for flying drones: the noise, large form factor, legality questions, and risk of crashing or inflicting damage. These risks have led many in the mass market to be excited by the technology but not purchase, or to purchase but not actively use. In 2016 we saw this change through a couple key technological advances.
Smaller form factors
The DJI Mavic is about half the size of a sheet paper; it’s portable, quieter than other drones, and just less intimidating overall than previous models available for photography and videography. The ability to casually carry the Mavic in any bag makes it much easier for prosumer photographers and travellers to use. Ease of transportation and the lack of intimidating size and noise accounts for many of the psychological factors in the drone customers buying process. It’s no surprise the Mavic has sold unprecedented numbers.
Sensors = Peace of Mind
Starting in 2015, obstacle avoidance and crash prevention was thrown around frequently by technology pundits as a great concept for future drone models, but the technology became reality faster than anyone expected in 2016. Ensuring that a roughly $1k purchase isn’t going to hit anything due to your pilot error is a huge pain point for drone buyers that technology effectively eliminated in 2016 (at least in the consumers purchase decision cycle, the technology is often argued to give a sense of false comfort). Now, this technology is built in for at least one direction in most popular drone models, and for the newest generation like the Inspire 2 and Phantom 4 Pro, sensors cover all directions.
Camera Quality Increase
In 2015, the standard of camera quality on a drone was a GoPro, and the popular Chinese drone manufacturers were still supporting GoPro or coming with alternatives that we’re slightly sub-par to the popular action camera’s quality. While the average consumer might believe a GoPro is suitable for aerial photography, the large prosumer and professional camera market does not. The new sensors, chips and lens glass present in the camera’s in the Phantom 4 and Mavic Pro were the first generation of smaller drones suitable for the minimum requirement for this market, and now with the Micro-4/3rds cameras on the Inspire Series and new Ambarella sensors in the Phantom 4 Pro expectations are being far exceeded.
Global Retail Adoption
It might sound hard to believe, but drones didn’t really have a premium retail presence globally in big box stores until the very end of 2015. One of the items I spoke about in my panel on disruption at NPD’s summit in Fall 2016 was the challenges faced by drones and new categories for retail adoption. Brands have had to educate store managers, store employees and customers on multiple concepts: the possibilities of the technology, legal regulations, and safety. This all needs to be done within a quick online touch, a team training, or via an in-store kiosk. This level of education is a serious undertaking for complicated products to represent themselves correctly and enter retail successfully, not just from a sales perspective, but providing enough education to ensure buyer satisfaction with their experience that doesn’t lead to returns or bad reviews. 2016 was the first time when stores across Europe, Asia, North America and South America had drones available in bulk, in multiple categories. While drones have dominated news cycles, they’re only at the beginning of their second year of true mainstream retail presence.
In August 2016, new drone laws for commercial use went into effect, lowering the bar for monetizing an individual or businesses drone ownership in the United States. The FAA notes currently over 30,000 users have passed this test. Now purchasers can justify buying their drone by believing they can monetize it at a later date. In addition, the 30,000 Part 107 permit holders actively using drones for business are incentivized to upgrade to newer, higher-tech models as they are released to maintain competitive advantage and offer the best services to their clients or inside their organizations.
I speak to several companies in surveying, infrastructure, mining, oil and gas, and real estate every week as part of my job at Hangar. Many of these companies are putting a DJI Phantom 4 or similar on every worksite or in every corporate office. Since the price and barrier to entry is so low, it’s becoming very easy to justify for companies that see value in aerial data. This is a major shift in organizational policy from purchasing a single more expensive drone to use across the company, or a casual trial on drones by one person. These bulk purchases account for a significant shift in volume for units bought for business purposes by companies. No longer are the purchases of drones for commerce made primarily by licensed drone provider small businesses, corporations are hitting mass-adoption as well.
Thanks for reading! Let me know any questions in the comments.