Although UAVs continue to pick up momentum in defense work, the market is poised to experience even more explosive growth in the civilian sector over the next decade.
Jeff Bezos enthuses about the possibility of a fleet of Amazon drones delivering parcels to your door within 30 minutes, but it is much more likely that the market for UAVs will experience significant growth in the near future in other applications including defense, infrastructure management and precision agriculture. In this post, we explore the leading players in UAV technology and make some speculations for the future of this industry. For more detailed insights, updated in real-time, login or register to view our UAV DataFox public watchlist.
What are UAVs?Unmanned aerial vehicles (UAVs), also known as Remote Piloted Aerial Systems (RPAS) or sometimes commonly referred to as drones, are small aircraft without a human pilot aboard. Flight for such vehicles is typically controlled remotely by a pilot on the ground or another vehicle, although systems with autonomous computerized on-board controls are also in development. UAVs are currently primarily deployed in military applications, for both reconnaissance and offensive purposes. However, research and development is now being undertaken to investigate feasibility in a small but growing number of civil and commercial applications, typically for tasks that are too “dull, dirty or dangerous" for manned aircraft, including humanitarian aid and disaster relief, infrastructure monitoring (such as oil pipelines), wildlife conservation and precision agriculture.
Although the market for civilian applications of UAVs remains limited at this point because the majority of aviation regulators across the world currently forbid usage, there are signs that some governing bodies are planning to integrate this new technology into the existing infrastructure in the near future, potentially paving the way for UAVs to enter mainstream civilian use in the coming years. For example in the US, the Federal Aviation Authority (FAA) has created a roadmap for the integration of UAVs into the National Airspace System (NAS) between 2015 and 2025, beginning with 6 test sites in the states of Alaska, Nevada, New York, North Dakota, Texas and Virginia that will conduct research and development to gather data for shaping future laws and regulations in this field.
UAV: Market Size & ShareOne report suggests that the market for military applications of UAVs is expected to grow from $7.28bn in 2012 to $10.7bn by 2017, at an estimated compound annual growth rate of 8% (although by examining the leading firms in DataFox we've found these speculations to be conservative).
Within this area, the demand for High Altitude, Long Endurance (HALE) UAVs, some of which employ solar power to extend their range, is likely to increase the fastest, at a projected CAGR of 9% to reach $1.3bn by 2016. Northrop Grumman (NOC) and Aerovironment (AVAV) are leading producers of HALEs that could benefit from the growth in this market. At present, General Atomic Aeronautical Systems, a privately owned San Diego firm, is the overall market leader with an 18.8% share. The US is currently the largest geographical market, representing 60% of total spending, with Israel also developing into a leading producer and consumer of military UAVs. Here's a quick snapshot of the industry leaders and key stats via our UAVs DataFox public watchlist (must be logged in to view full watchlist):
The Rise of the Civilian UAV SectorPotentially more interesting is the projected growth in the civilian UAV sector. The Association for Unmanned Vehicle Systems International (AUVSI) estimates that the market for UAVs in 2013 stood at $11.3bn, and has the potential to grow to over $140bn within the next 10 years subject to regulatory approvals. In this space, Insitu, a wholly owned subsidiary of defense and aviation giant Boeing (BOE), is developing a strong offering in the fields of environmental and infrastructural monitoring, public safety and communications.
Recent trends in the UAV MarketIncreased demand and intensifying competition in the military UAV space has resulted in acquisitions and consolidation, including Lockheed Martin’s (LMT) purchase of Chandler/May, a key supplier for its UAV programs.
Lockheed Martin has also been active in the commercial UAV R&D space, recently announcing a partnership with Aerovironment to jointly develop the Global Observer program for High Altitude Long Endurance UAVs that can be used for weather and disaster monitoring, aerial imaging and satellite communications services, sending AVAV shares up over 20% in March 2014.
Below is a quick preview of the leading companies with their corresponding DataFox scores. Want even MORE cutting edge insights on this emerging market? Log in or register to view our full UAV public watchlist.
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