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This is the biggest challenge for the drone industry in 2018, experts say

The biggest challenge for the drone industry in 2018 isn’t getting more funding or finding better employees. It’s not getting better drone hardware either.

Software product development is the  biggest challenge for the drone industry in 2018, according to a June 2018 study conducted by Drone Industry Insights, a Germany-based market research firm.

Drone Industry Insights asked 350 companies or groups about their drone industry applications, usage and experience. The survey responders were made up of 43% commercial drone users, 38% drone manufacturers and 19% research institutes or universities. All survey respondents resided or worked in any of the EU member states. Survey respondents were allowed to select multiple responses, which is why the percentages total up to more than 100%.

Software product development was rated the No. 1 priority over the next 12 months among drone users and service providers. 44% of respondents said software was the sector where they would pour the most resources in this year. Coming in at No. 2 was marketing and sales, picked as a top priority among 39% of drone users or service providers.

Software is imperative in making the drone industry actually work safely and efficiently, which could be why it’s such a priority.

“With UAVs—and in mobility more broadly—the software actually does have to be better when it’s released,” said Siggi Hindrichs, an early stage tech investor at Samsung NEXT, the venture capital arm of Samsung. “It’s likely “mission critical”. There could be real safety implications for payloads, passersby, or even passengers.”

Software product development and marketing/sales were also a top priority among drone manufacturers, though the inverse — with marketing and sales coming in at No. 1 as a top priority for 70% of survey respondents.

On the other hand, drone hardware development is only seen as a priority among 31% of drone users or service providers, and for just 46% of manufacturers. The majority of drone hardware used by the industry is manufactured by Chinese drone maker DJI, which has an estimated 70-80% market share.

Kittyhawk

And the hardware it makes isn’t too expensive, relatively speaking either. 72% of drones used by Kittyhawk users are made by DJI. Of those, most of them cost less than $1,000, such as the DJI Mavic Pro which is used by 21.83% of users. Mapping software startup released similar user data and revealed that 35% of Drone Deploy customers are using the DJI Phantom 4 Pro. 27% of its user base is on the DJI Mavic Pro, and 16% use the DJI Phantom 4. Just 10% of its users are using DJI’s enterprise drones, such as the Inspire and DJI M200 series.

But the industry is still facing growing pains when it comes to software. Software is essential in uses such as air traffic management, data analysis, airspace approvals and more.

The Federal Aviation Administration is still working on laying out the groundwork for a network of drone air traffic management. Companies like AirMap and Skyward have created software related to air traffic management — setting themselves up to be ready for when the FAA rolls out plans, but for now, there isn’t much of a drone air traffic management system in place.

The FAA has made baby steps recently with the launch of its LAANC program, which allows drone pilots to connect to software (such as that made by AirMap and Skyward) to get instant approval to fly in controlled airspace, such as near airspace. But that program is still in beta testing mode, both in terms of which airports are participating in the program and which companies have the authority to connect users with instant FAA-airspace authorization.

Many drone operators also cite that flying the drone is the easy part, but finding means of analyzing the data is the challenge.

“More sensors can be used on drones, gathering even more data and even more precise data,” according to the report…it needs to be possible to automate workflows, particularly the evolution and processing of the captured data,” according to the report.

Perhaps most surprisingly is that most commercial drone operations are not hurting for cash. Only 11% of respondents said that they saw a need for more funding within the next 12 months.

Several big drone industry players have announced major funding rounds in recent months.  Drone delivery startup Matternet recently announced a $16 million Series A funding round led by Boeing’s HorizonX. In June, Boeing’s HorizonX also led a relatively small $5 million funding round in Kittyhawk. Kittyhawk is a drone software company, suggesting that given the industry’s declared need for software improvements, these latest funding rounds could deliver that.

But perhaps one reason why funding isn’t seen as much of a top priority?

“My impression is that venture capitalists have made their initial drone bets—many in hardware and several with lots of funding—and so are now sitting back and waiting for those bets to pay off,” Samsung NEXT’s Hindrichs said. “Software will bring some of those bets to fruition, at which point those companies will be able to raise more money at higher valuations—and we’ll see a new round of drone companies also being funded.”

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