Drones are an economic game-changer, potentially transforming the way we do business. This recognition has been adopted rapidly by the world’s digital majors, including Amazon, Google and Facebook, who have all rushed out to purchase drone-specialist companies in the hope of catching a lead in the market. As the drone sector matures, it will continue to offer huge opportunities for major exits, especially as sell businesses becomes specialists in this market. Especially in major e-commerce hubs such as the London corporate finance scene, drones can make a major difference.
Drones are already assisting emergency and disaster management programs, national weather service tracking, traffic management programs, shipment delivery and much more. But their movement into the mainstream has been driven by the recent purchases of drone companies.
In 2014, Google acquired Titan Aerospace, the drone start-up that makes high-flying robots which was previously scoped by Facebook as a potential acquisition target. Octoblu, a machine to machine networking platform for drones, was also acquired by Citrx, while Facebook bought a Somerset-based designer of solar-powered drones for £12m.
Retail and e-commerce – as well as related logistics and shipping industries – have the most at stake in the wide deployment of civilian and commercial drones. Drones might be the missing link in the shipping chain that allows for nearly immediate e-commerce deliveries. Other major industries that could be transformed by drones include security and surveillance, disaster recovery, logistics, photography and journalism, and even farming.
Many brands have already been experimenting with drone-delivery, with US e-commerce giant Amazon and Dominos Pizza brand in the UK unveiling delivery drone concepts in 2013. Other brands have been quick to follow suit, partly as a promotional stunt but also as a base for future innovation. In 2014, Coca-cola partnered with the non-profit Singapore Kindess Movement to send handwritten notes of thanks attached to cans of Coke to migrant workers.
Last year, Google announced it is developing a system of drones to deliver goods. Known as Project Wing, the prototype is 5-foot-wide and is being used to deliver candy bars, cattle vaccines, water and radio to farmers in Queensland, Australia.
Drones can ultimately lower business costs in deliveries, and as such their integration in wide-scale company operations is inevitable. The appealing prospect of skipping traffic queues and gaining access to areas with weak transport links is simply to tough to resist.
The biggest obstacle in the implementation of drones for companies such as Google and Amazon is the legal one. Drones are small, hard to spot and easy to operate. This makes them very difficult to regulate and police.
Privacy and data protection is a major issue. It is not fully clear how or when the current laws will apply to drones in this sensitive area. The laws of trespass are not much comfort either. It has not been firmly decided how much airspace a person owns above their land and so it is unclear what rights people will have to keep their properties drone-free.
Nonetheless, these issues are likely to get resolved and will not stop digital majors buying up drones manufacturers and innovators in the meanwhile, as this new exciting segment becomes increasingly lucrative over the medium term.
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