Drone Maker Aims to Land Commercial Sectors

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Military drone manufacturer AeroViron-ment Inc. is charting a new course.

In an effort to snag a piece of the expanding commercial unmanned aerial vehicle market, the Monrovia company unveiled its Quantix drone on Nov. 15, which will be available for purchase this spring. According to the company, the mono-wing drone takes off vertically, flies horizontally, glides with little pilot guidance, and boasts sophisticated photo-analysis software. AeroVironment is betting that these features will make the product a must-have for agricultural, energy, and utility companies looking for an easy way to surveil infrastructure and property.

“This is the first drone we developed specifically for commercial customers,” said Steve Gitlin, the company’s vice president of strategy. “We think it could be an important growth driver for our business.”

There are a lot of drivers heading down that road now. AeroVironment will have to fend off several low-cost Chinese manufacturers already dominating the recreational drone market and starting to achieve lift off with commercial customers. In fact, about 43 percent of drones registered for commercial use with the Federal Aviation Administration are made by DJI of Shenzhen, China.

Michal Mazur, head of Pricewaterhouse-Coopers’ Drone Powered Solutions division in Warsaw, Poland, said AeroVironment could face stiffer headwinds than its Chinese competitors as it tries to expand,

“It seems like recreational drone companies are more successful at entering the commercial drone market,” said Mazur, adding that customers are often wary of paying a premium for drone technology, preferring rather to gravitate toward cheaper products. DJI’s least expensive drone is priced around $500. While Gitlin would not disclose the exact pricing of the Quantix, he said it would cost at least $10,000.

Nonetheless, even grabbing a small chunk of the growing commercial market could represent an opportunity for AeroVironment. The emerging global market for business services using drones is valued at over $127 billion, according to a report released by PricewaterhouseCoopers in May.

“I think use of drones will completely reshape the operational model of companies,” said Mazur.

Liftoff

AeroVironment, founded in 1971 by aeronautical engineer Paul MacCready, built its business by selling unmanned surveillance aircraft to the military. The company also makes electric-car charging stations. It generated $264 million in revenue during fiscal year 2016. Of that, $234 million of that total, or 89 percent, came from selling drones, which are manufactured at its 85,000-square-foot plant in Simi Valley, according to a Securities and Exchange Commission filing.

AeroVironment developed the Quantix drone in anticipation of the FAA’s decision to relax regulations concerning commercial drone flights, said Gitlin. The agency instituted new rules in August for the commercial use of unmanned aircraft weighing less than 55 pounds, including dropping a requirement that a drone operator have a pilot’s license.

That’s crucial to the Quantix’s prospects because the product is designed to be used by novices, he said.

“Commercial customers don’t necessarily want to become drone experts,” he said. “They don’t want to have to learn all the intricacies of setting up, launching, flying and trouble-shooting.”

Much of Quantix’s operations, including take-off and landing procedures, are automated and require minimal operator interaction. It is able to take off from tight spaces and survey 400 acres in about 45 minutes. The aircraft also contains multispectral cameras that make it well-suited for farmers and property owners needing to examine vegetation, said Gitlin.

“Currently, it’s quite difficult to take a picture of your crops from above,” he said. “With a drone, you really have the ability to do that whenever you want to.”

Image analysis software also helps drone users make sense of changes in landscape, vegetation, and infrastructure by overlaying photos taken at different times, said Gitlin.

High price

Despite its high-tech features, Quantix’s price tag will likely prevent it from becoming a mass-market product, said Peter Arment, an analyst with Robert W. Baird & Co. in New York.

“High-end performance certainly is going to capture the attention of some enterprises that can afford to pay for that capacity,” he said. “However, the commercial drone market is flooded with low-price drones, and it’s yet to be determined how big of a market the Quantix is serving.”

The aircraft might have one major local customer: Southern California Edison.

Jeff Billingsley, the utility’s director of transmission, said Edison has used AeroVironment’s Puma fixed-wing drone over the last 12 months to surveil its property. In particular, the Quantix might be useful in identifying power lines overhung by vegetation.

“These drones will enable us to identify trees that are stressed before it is apparent to the naked eye,” said Billingsley.

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