DJI dominates the consumer drone market, but what about the professional field?

The unsexy industrial drone market has become extremely lively, with drones being used in plant protection, power inspection, security, logistics, etc. On the other side of the coin, at the end of 2016, Ehang and Zero Control announced layoffs one after another. In the process of exploring the possibility of surpassing DJI, no company has given a final solution. Even DJI is looking for the possibility of self-breakthrough, extending its tentacles to industrial applications, and looking for new growth opportunities.

The head effect of the consumer drone market has already taken shape, with DJI Innovations occupying more than 70% of the global consumer drone market share, and users of various flight platforms and handheld devices in more than 100 countries and regions around the world. With the implementation of the new drone regulations, consumer drone sales have generally declined, including DJI, which has an absolute market share.

Bypassing the consumer market

Wang Lijie, founder of PreAngelFund, which participated in the B round of investment in Ehang UAV, told the First Financial reporter that he is no longer looking at consumer UAV projects because "the timing has passed." "There are no big opportunities in the consumer UAV market. The winner-takes-all situation is becoming more and more obvious. Now it is all DJI's market." Wang Lijie said that even Ehang, which he invested in, has begun to turn to the research and development of manned UAVs.

In Wang Lijie's view, the probability of winning or losing is determined by the total number of players on the table. "When looking at a track, you cannot see more than ten players. We are not afraid of things being too difficult, but we are afraid of competition being too chaotic. Too many competitors will lead to chaos, and the more chaotic it is, the more uncontrollable it will be." In subsequent investments, he focused his investment targets on drone projects and anti-drone systems related to military-civilian integration and national defense science and technology, and launched two projects, "Purple Swallow" and "Renren Fei".

Investment in the entire consumer drone market is indeed tightening. According to a venture capital report jointly released by KPMG and CBInsights, the global drone industry received 13 financings totaling US$55 million in the third quarter of 2016; compared with US$134 million in the same period last year, the scale of funds dropped sharply by 59%; in the second quarter of 2016, the drone industry also received 13 financings with a total of approximately US$106 million.

"A drone is actually a flying robot, or even more than a robot. At a higher level, it may be a platform. In the future, drones will definitely develop in a professional direction." This allows GGV Capital investor Wang Xinyu to see a broader space for imagination.

GGV Capital invested in "Farmland Manager" which connects plant protection pilots and farmers. It is revealed that it has recently invested in an industrial vertical drone service platform. Wang Xinyu believes that "after the drone industry chain is relatively mature, some peripheral services of drones have begun to appear, such as drone airspace maps and drone charging stations. At the same time, vertical applications in the industrial field are yet to be explored. There are investment opportunities in these fields."

Tearing open the market cracks

Different from the pessimistic predictions about consumer drones in the market, Zheng Weifeng, founder and CEO of Zhendi Group, is still optimistic about the consumer market. "The drone industry is still far from the peak we imagined. There are still many technical points that have not been broken through in this industry. The usability is not as good as point-and-shoot cameras. In many cases, drones are even dangerous tools. This is how I think about the size of the drone market."

Zhendi Group started its drone business in 2012, starting with commercial drone business for B-end, and then launched consumer drone products for C-end in 2016. In addition to launching the more convenient and easy-to-use egg-shaped consumer drone PowerEgg, Zhendi has opened up a more segmented market - underwater robots.

"From a global perspective, there are three types of companies that make money from drones. One is for military use, one is for services and solutions, and the other is for consumer-grade aerial photography." Zheng Weifeng said. In his opinion, moving from the B-end to the C-end is a dimensionality reduction strategy.

Nowadays, drones that can "reach the moon in the sky" are already well known to the public, but underwater robots that can "catch turtles in the five oceans" are still a new field. Zhendi has extended drone aerial photography to the underwater market and equipped it with a fish finder that can detect fish schools, terrain and temperature information within a depth of 40 meters.

In 2016, the global market for fishing gear and underwater outdoor sports was approximately US$200 billion, so the market for underwater robots is still very large. At this stage, Zhendi focuses on the market share rather than the size of the economy.

Avoid DJI’s edge

Avoiding direct competition with DJI and laying out new tracks as early as possible has become the choice of most drone companies.

Jin Liang, the founder of Zhihang UAV, is a senior model aircraft player with more than 30 years of experience. He founded a model aircraft company. Affected by the financial crisis, Jin Liang sold the model aircraft company for strategic transformation considerations and devoted himself to the UAV industry in 2014. Jin Liang told China Business News that in the early days of entering the UAV industry, the company was simultaneously making consumer and industrial products, but after a period of exploration, it soon downplayed the consumer market and focused on industrial products.

Jin Liang's judgment is that "the market's enthusiasm for the consumer drone market is waning. Except for DJI, most drone companies are still in a loss-making state, and the consumer drone industry has entered a state of price war. Compared with aerial photography drones, the company's advantages are concentrated in the power system, remote communication system and flight control technology, which are more suitable for industrial-grade scene applications."

Logistics drones have become Zhihang's most prominent label. In October 2015, Zhihang received joint investment from SF Express and Northern Lights, and began to increase its exploration of the logistics industry. Compared with other industry applications, logistics drones have attracted much attention from the public since the beginning because they are closer to consumers, but the application of drones in domestic logistics is still a long way to go.

"Drones will sooner or later replace low-level means such as traditional logistics vehicles and couriers, but when they can be replaced depends on the country's low-altitude regulatory policies. On the other hand, it also depends on how reliable the product itself is and how low the cost can be compressed."

According to Jin Liang, the reliability requirements for logistics drones are very high. SF Express has set a requirement for Zhihang to have a one-thousandth flight failure rate. At the same time, unlike security surveying and mapping, logistics drones only cost a few yuan to deliver a ticket, so the manufacturing and production costs must be controlled. "The performance of the space shuttle and the price of the tractor do not meet national regulations. Low cost and high reliability are contradictory in themselves, but companies have to balance this matter." Jin Liang told reporters.

Jin Liang knows that it is not realistic to deploy logistics drones to the C-end. At present, Zhihang mainly focuses on the development of point-to-point commercial drones. In February this year, Zhihang's drones completed a "cross-island flight exercise" from Xichong to Sanmen Island in Dapeng New District. Faced with a long technology research and development cycle, Jin Liang had to take some measures to resolve the risks, first build a flight platform, carry different loads for different industry applications, and realize cash in mature markets.

Exploring the “New Airspace”

Similar to the robotics industry, governments and institutions remain the most stable buyers, and security, power, and military have become the most mature and reliable application markets. Lu Zhihui, chairman of Kobet Aviation, told Caixin, "The cost of industrial drone testing is much higher, especially in the military industry. One test costs 400,000 to 500,000 yuan or even millions of yuan, and a large number of long-term extreme environment experiments are also required. However, this is also one of the barriers to entry for industrial drones."

After leaving DJI, Lu Zhihui eventually founded Kobit, which specializes in the production of industrial-grade drones. 60% of the company's business is for public security and firefighting, and 30% is for petrochemical systems and power inspections. At the beginning of this year, it also began to focus on the military market.

Lu Zhihui insists on four points of judgment for market selection. First, we need to understand the market capacity, for example, by investigating the market demand of each fire brigade to calculate the total market size. Second, we need to understand the maturity of the market. Whether the early stage of publicity and education is at the stage where we can gradually increase the volume. Third, the threshold is relatively high, and it is not easy to fall into price and homogeneity competition. Fourth, we need to have channel advantages.

Based on these four judgments, Kobet gradually faded out of the plant protection market. The overall market background is that hundreds of companies have entered the field of agricultural and forestry plant protection, and profits have also been compressed. "In 2015, an agricultural and forestry plant protection machine could be sold for 200,000 yuan, but in 2016 it was only 30,000 or 40,000 yuan, and it is currently in a state of heavy operation, so it is difficult to replicate the model." Lu Zhihui told Yicai.

The military market has always been an area that Kobite wants to enter. Drones originated from the military market, but currently all military drones are fixed-wing drones. On the one hand, they are expensive, with a price of tens of millions and large in size. On the other hand, they cannot take off and land vertically, which requires the construction of airports, and the threshold for deployment and use is high.

Multi-rotor military drones with long flight time, light weight, flexibility, and vertical take-off and landing have become a blank spot in the market. Abandoning mainstream lithium battery technology and using hydrogen fuel cells to increase the flight time of drones has become one of Kobite's core technologies for entering the military field, increasing the flight time of drones from more than ten minutes to several hours. At the same time, safety testing, storage technology, and cost issues related to hydrogen fuel cells are also the focus of Kobite's current research and development.

High thresholds mean high investment, and the transition to the military market also has great differences in product performance and solution requirements. For example, drones are required to meet the "three-proof" standards, rainproof, high temperature resistant, and dustproof, which requires a lot of experiments and the development of sufficient experimental equipment. In order to meet military needs, Kobite took the developed drones to Yulong Snow Mountain for high-altitude and low-temperature testing to test the discharge capacity, temperature adaptability, and stability of the power system. For another example, hydrogen fuel cells also need to be equipped with hydrogen production equipment and pressurization equipment, which also require capital investment.

But the opening of the new airspace has already brought sweetness to Kobit. In 2017, Kobit signed the only exclusive cooperation agreement for multi-rotor vertical take-off and landing UAV products with one of the largest military UAV export companies in China in overseas military trade.

At present, my country's military product exports have a strict regulatory system, and there are less than ten companies with weapons export qualifications. The unique channel advantage has greatly increased Lu Zhihui's confidence in the future. "The performance in the military industry in the first half of this year is already five times that of the whole year of last year, which has become the company's rapid growth point. It is expected that by the end of the year, including industrial-grade applications and the military market, will achieve a 10-fold growth."

"Enter through the narrow gate. For wide is the gate and easy is the way that leads to destruction, and many enter through it. But narrow is the gate and hard is the way that leads to life, and few find it." This is a sentence from the Bible: Matthew in the New Testament. Outside the trend, these drone companies are looking for the next "narrow gate" for drones.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.