Despite rapid growth, new technology, and an evolving ecosystem, the drone industry is fragile, says Chris Raabe. As the Energy Drone and Robotics Summit 2023 kicked off this afternoon in Houston, TX, the CTO of drone manufacturer ACSL discussed the need for a global strategy to combat drone industry fragility.
Chris Raabe began his career in the aviation industry at Boeing. He then received his PhD at the University of Tokyo, staying on as a faculty member for a number of years before joining ACSL, where he now serves as the Chief Technology Officer. ACSL is a Japanese company just entering the US market with their small commercial drone, Soten. From his position, Raabe has a unique viewpoint on two of the major challenges that lead to drone industry fragility: geopolitical pressures and supply chain and manufacturing challenges. Which countries are in a position to fulfill demand from both the development and the mass production standpoint? How is Japan leveraging manufacturing expertise and their own unique geopolitical position to become an exporter of autonomous technology?
Why the Global Drone Industry is Fragile Right Now
“This is based on my own experience as a global CTO,” says Raabe. “… I think there is fragility right now in the drone industry, and I think we need a global strategy to combat that.”
As the drone industry evolved in the 2010’s, says Raabe, the race to dominance in the drone industry had one clear winner. During that period, the pace of development made by DJI “was breathtaking,” says Raabe: and that success led to a positive feedback loop which led to more DJI products and higher adoption. Competitors were unable to keep up: both with the cost of manufacturing and the pace of new offerings. “Suddenly we had a dominant player who had more than 70% of the market,” says Raabe.
DJI drones became the go-to tool for a wide variety of commercial users, who found that even for specialized work they could get most of what they needed from an inexpensive, commercial off-the-shelf product. Now, however, geopolitical pressures and new laws in countries including the U.S., Australia, and India limiting the use of Chinese drone tech have led to concerns about whether or not industrial customers will allow DJI products on site. No other commercial company is able to currently match DJI’s breadth of portfolio and pricing. Use-specific, specialist companies are often not cost-effective alternatives. These limitations create an environment in the drone industry that is detrimental to users, Raabe points out, and could lead to slower growth.
What it Takes to be Competitive in a Dominated Market
There are four particular factors that go into being competitive in a dominated market, says Raabe:
- Competitive pricing
- Market awareness: features, and customer experience
- Technical competence: miniaturization and tight integration, safety features, usability
- Mass production competence: product quality and consistency (precision), scalability, traceability
Economies that can meet all of these factors are few. Raabe says the “sweet spot” at the intersection of innovation and production is somewhere between the pure manufacturing economy which may not have the innovation expertise, and an advanced service economy like the US or Australia where manufacturing may be simply too expensive to scale.
The solution for economies who can’t meet all of the factors for competition, says Raabe, is partnership. Companies and countries can work together to leverage their strengths and build a robust ecosystem of innovation, supply chain and manufacturing.
Raabe’s experience is in Japan – a country whose aging infrastructure and shrinking population has led to a significant need for automation. Japan has a long history of manufacturing for the automotive and other industries, and the devalued currency has brought labor costs down. For these reasons, Raabe says, Japan – and other countries like it – could be new partners for developers and innovators to diversify and strengthen the global drone industry.
Miriam McNabb is the Editor-in-Chief of DRONELIFE and CEO of JobForDrones, a professional drone services marketplace, and a fascinated observer of the emerging drone industry and the regulatory environment for drones. Miriam has penned over 3,000 articles focused on the commercial drone space and is an international speaker and recognized figure in the industry. Miriam has a degree from the University of Chicago and over 20 years of experience in high tech sales and marketing for new technologies.
For drone industry consulting or writing, Email Miriam.
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