DJI earlier this week announced its new Phantom 4 drone, which can sense obstacles in front, behind and on both sides of it, and it has left industry experts wondering how much downward price pressure the drone-making behemoth can put on the industry.
The new Phantom 4 Pro, priced at $1,499, is an improvement on the Phantom 4 drone, which is also targeted to the prosumer segment and has only one sensor on the front.
“DJI is coming out with new versions of its products left and right,” said Alan Perlman, founder of drone online community and training program UAV Coach. “They’re offering so many options, and maybe it’s a good strategy in the short term to flood the market.”
But Perlman warned that DJI could be contributing to downward pricing pressure throughout the industry.
The Phantom 4 Pro is priced at $1,499, just $100 more than what its predecessor cost when it was released in March.
@TheDroneGirl Man, they’re iterating faster than Apple now, it’s nuts. They’re doing more harm than good to their own sales.
— Esa Ezzy Edvik (@HiredCam) November 15, 2016
“If that pricing cannibalizes our own products, that’s OK,” said DJI spokesman Adam Lisberg.
Yuneec’s rival Typhoon H drone has the same price point of $1,499. While it does have Intel RealSense Technology that can detect and navigate around obstacles, it only has one sensor on the front of the drone.
DJI has an estimated 70% market share in the prosumer drone industry, and its products are consistently priced lower than those of its competitors.
- Purchase the Phantom 4 Pro Quadcopter from B&H Photo for $1,499.00.
- Purchase the Phantom 4 Pro Quadcopter directly from DJI for $1,499.00.
- Purchase the Phantom 4 Pro + Quuadcopter from B&H Photo for $1,799.00.
- Purchase the Inspire 2 directly from DJI for $2,999
- Purchase the Inspire 2 from B&H Photo for $2,999
“In this industry you’re seeing a lot of price pressure, which impacts margins,” said Shan Phillips, CEO of DJI competitor Yuneec USA, in a past interview with MarketWatch. “That is painful for everyone — more painful for some who have left the industry.”
Price pressure may be part of what forced competitor 3D Robotics to cut more than 150 jobs earlier this year.
“We got knocked down for a really simple reason: We made too many Solos, especially given how fast our competitors dropped prices and flooded the market,” former 3D Robotics President Jeevan Kalanithi wrote in an internal email to staff. (The Solo now costs less than $400 on Amazon).
While DJI is currently king of the drone industry, Lisberg said DJI is aware of the competition.
“Our company culture is to always be afraid of the four other kids in the dorm,” Lisberg said. “Whoever is trying to eat our lunch, we work to get ahead of them.”
Logan Campbell, founder of drone consulting group Aerotas, says that since the drone industry is moving at a fast pace, companies have to keep cannibalizing themselves the way DJI has done.
“DJI is actually solidifying its place in the market rather than risking it,” Campbell said. “Drone companies cannot create products and expect them to last five years.”