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January 4, 2013 9:21 AM

The Drone Wars... Business Style

Drones are everywhere.

Less than a decade ago, The Pentagon had about fifty unmanned combat air vehicles (known as drones or uav). It is estimated that they currently have about seven thousand of them (Congress asked for about $5 billion worth of more drones in 2012). There's a scene in Showtime's hit television series, Homeland, where Nicholas Brody (the former prisoner of war and current United States congressman) is told by David Estes (the director of the CIA's Counterterrorism Center) that the use of drones in the war on terrorism has moved from forty unmanned combat air vehicles to nearly four thousand in no time at all. While that was a fictitious scene, it was the type of statement that would make anybody raise an eyebrow. What makes that moment in the thriller all that more interesting, is that the numbers aren't even close to the staggering reality of how many drones are in operation. And, that's just the work being done by United States. the International Institute for Strategic Studies has identified fifty six different types of drones being used in over ten countries (and this data does not include places like China, Turkey and Russia). Now, drones are moving from the battlefield to your neighborhood, and it's about to create a brand new industry and big business right along with it.

FAA approval is pending.

According to the Federal Aviation Administration, the use of commercial drones in United States airspace could become official starting in 2015. On December 25th, 2012, The New York Times published an editorial titled, The Dawning of Domestic Drones, that states: "The drone go-ahead, signed in February by President Obama in the F.A.A. reauthorization law, envisions a $5 billion-plus industry of camera drones being used for all sorts of purposes from real estate advertising to crop dusting to environmental monitoring and police work." But, this is just the beginning as industry analysts feel that the market will double in less than a decade. We had mass adoption of the wristwatch post World War I when soldiers began attaching their pocket watches to their wrists for more practical purposes. The Internet's genesis has its roots dating back to the 1960s as a United States government commissioned program to build a better distributed computer network. A lot of the work and innovation coming out of the Defense Advanced Research Projects Agency (DARPA) is created for military usage, but then becomes commercialized for business practicalities as well (this includes computer networking and the first hypertext system, which was an early form of the graphical user interface). With so many products that begin as something specialized for the military and then turned over to us, every day, citizens, it's becoming apparent that drones are on the verge of something big. 

What a drone-based business could look like.

Chris Anderson is the former editor-in-chief at Wired Magazine along with being a three-time bestselling business book author (The Long Tail, Free and Makers). He recently left his post at Wired to work on his own passion project (DIY Drones) turned startup called, 3D Robotics, that recently raised five million dollars in venture funding. This idea of drones being used as a commercial entity to help businesses come up with new and inventive ways to optimize their operations turns out to be something that the FAA is finally looking at nearly a half decade after the demand from corporations. In a blog post dated, February 12th, 2009 titled, Fred Smith: FedEx wants UAVs, you can feel the nascent thinking about just how powerful a drone-based network could be for businesses in the not-too-distant future. Fred Smith, the founder of FedEx, wants drone usage in his business as quickly as possible. From the blog post: "Unmanned cargo freighters have lots of advantages for FedEx: safer, cheaper, and much larger capacity. The ideal form is the 'blended wing.' That design doesn't make a clear a distinction between wings and body, so almost all the interior of both can be used for cargo. The result is that the price premium for air over sea would fall from 10x to 2X (with all the speed advantages of air)." The blog post goes on to state: "the key thing is having NO people on board, not even as backup. A single person in the craft requires a completely different design, along with radically different economics and logistics. The efficiencies come with 100% robotic operation." Anderson doesn't think we're there, just yet. He's currently selling a $500 drone that is a small and light aircraft that is only usable in non-urbanized zones and must follow specific laws to not interfere with FAA authority (which includes carrying payloads and other uses that are illegal).

More automation and loss of jobs or more automation and the new work force?

It's important to remember that we will require a significant labor force to design, program, maintain and organize this type of business. In short, drone usage at the domestic work level, is going to create a significant amount of jobs where both the talent and title doesn't even exist today. Imagine the hybrid of aviation, logistics, technology, supply chain management and more that will be required to be an effective employee in the near-future for the drone industry? Will that amount of new labor be able to fully offset those who currently have jobs that can be replaced by drones? It depends on several unknown factors at this moment in time, but change is coming. Increasingly, the stuff we see in science fiction and comic books, becomes a business reality. Fast.

It's not just FedEx.

The fact remains, that with all of the privacy, legal and FAA hurdles that will have to be overcome, this is the dawn of a brand new industry where drone-like aircrafts will move from military use and the DIY culture into a brand new commercial industry. As Anderson has already stated on countless occasions: the advanced technology that encapsulates a smartphone (GPS, accelerometers, gyroscopes and simple-to-use software and interfaces mixed with sophisticated and light hardware) means that cheap solutions to unmanned air vehicles are a certainty. Once drones are being used in domestic settings beyond that of hobbyists - and citizens feel like their privacy is not being breached - it's not hard to imagine businesses and marketers coming up with new and inventive ways to use drones to better commercialize their businesses. Currently, Geologists like Jan Grygar are using drones to take high-definition photographs, while Simon Jardine and his business, Eye In The Sky, are using drones to sell aerial photography. Interestingly, both Grygar and Jardine have also started companies to manufacture and sell drones to other businesses. "The analogy is closer to the PC coming after the mainframe," Anderson concedes. "Which is to say, that these are not the most powerful drones in the world, but they will be the cheapest and they will be the ones available to regular people. Fundamentally, those people are going to find new applications for the platform that the traditional industries never thought of."

Now, we're beginning to see uses for drones in agriculture, 3D modeling, security (like saving the rhinos in South Africa), environmental analysis, news reporting, filming, human rights monitoring and more. Just imagine what will be as more venture capital, entrepreneurs, inventors and every day people start exploring the new business opportunities that drones will create.      

I, for one, welcome our new drone overlords.

The above posting is my twice-monthly column for the Harvard Business Review . I cross-post it here with all the links and tags for your reading pleasure, but you can check out the original version online here:

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