TECHNOLOGY, MARKET

AND REGULATION
DRIVING UNMANNED
AIRCRAFT

ITS TIME FOR

DRONES
01
04

Drones conquer
the skies

Drones that let

entrepreneurship
take flight

02
05

SERIE INNOVATION TRENDS

Who's leading
the drone
market?
INFOGRAFA

Universo drones

03

Canarddrones:
a Spanish
company
offering
airport drones

01
Drones conquer
the US skies
New US legislation eases the law applicable to
unmanned aircraft, although questions of the security
and privacy of commercial operations that use drones
to deliver products remain up in the air.

SERIE FINTECH June 2016 www.centrodeinnovacionbbva.com/en

The US skies are opening up to

drones for commercial use. The
United States has announced
new regulations applicable to
unmanned aircraft. On June 21
the Federal Aviation
Administration (FAA) published
new rules applicable in the
United States that greatly
reduce limitations on drones
weighing less than 25 kilos.
Previously, drone users had to
have a pilot's license and
request flight authorizations.
Now these requirements have
been lifted: drones will have to
be registered and users will

have to pass a skills test every

two years. Authorization will still
be required in sensitive areas,
particularly those located close
to airports, but the
Administration has undertaken
to respond to applications
within ten days.
Drones for commercial use will
have to fly not higher than a
maximum limit of 122 meters
(400 feet) (compared with the
150 meters in France or 120
meters in Spain), and remain
within the operator's line of
sight without moving over
densely populated areas.

SERIE FINTECH June 2016 www.centrodeinnovacionbbva.com/en

The announcement of this

regulation has been well
received by all the parties
involved. "I regard it as a
significant milestone," said Brian
Wynne, president of AUVSI (the
Association for Unmanned
Vehicle Systems International),
which represents the main
companies in the sector. "This is
just the beginning of this
process. And obviously we're
going to continue to work
closely with private sector
entities... because the President
has made clear that the future
success of our economy will
depend on our ability to
continue to innovate,"
highlighted Josh Earnest,
President Obama's Press
Secretary.
However, the new rules do not

mention the question of

deliveries using drones.
Amazon, Alphabet (formerly
Google), Walmart and the
Chinese company Alibaba have
major projects underway and
the FAA has already awarded
licenses for some of these
companies to carry out tests.
The White House has noted
that talks are already being held
to develop regulations in this
area.
The FAA has more or less
opened the door by indicating
that the procedures for
obtaining a waiver (the
government agency has already
granted thousands) will be
simplified. In fact, currently it
would be premature to legislate
on the question of drone
deliveries. The operators still

SERIE FINTECH June 2016 www.centrodeinnovacionbbva.com/en

do not have a system of

automated management of
low-altitude air traffic, on
which NASA is working with
multiple startups. They have still
not been developed for major
distribution companies.

The rules also do not deal with the issue of

security and privacy, which as this editorial in The
New York Times notes, is a matter of concern: But
as drones have become smaller, cheaper and more
numerous some popular consumer models sell
for less than $1,000 policy makers have had to
address potential problems. These machines can
obviously be put to good use - say, inspecting
cellphone towers, shooting movies or compiling
multidimentional real-estate portfolios. They can
also be used to snoop on people and harass
them. And they can threaten other aircraft."
The US daily highlights that "some regulation of the
private and commercial use of drones thus seems
inevitable. The task for regulators is how to protect

SERIE FINTECH June 2016 www.centrodeinnovacionbbva.com/en

privacy and promote safety without infringing on

the First Amendment rights of citizens and
businesses that wish to use drones for legitimate
purposes, like photography or news gathering."
It notes that "many privacy advocates are also
worried that drones used by businesses will collect
information like wireless signals emitted by
cellphones that could be used to determine
peoples locations. One marketing company did just
that last year in Los Angeles." Nevertheless, it
points out that "The publics desire for clear rules is
understandable. Still, policy makers should not
make it so difficult to use drones that they end up
limiting the First Amendment rights of filmmakers,
activists and journalists.

02

Who's leading the

drone market?

Commercial drones are taking over the market. The first barrier price
is now disappearing, thanks to interest from companies and consumers.
The figures bear out the attraction of unmanned aircraft: deliveries of
drones to consumers all over the world is expected to exceed 7.3
million in 2016 and to hit 29 million by 2021.
SERIE FINTECH June 2016 www.centrodeinnovacionbbva.com/en

United States is the largest potential

market for commercial unmanned
aircraft, followed by Europe and
China. Paradoxically, the US has
historically trailed behind Europe in
terms of drone uptake, due to the
slow progress of its regulations.
Europe had over 2,500 commercial
drone operators in July 2015,
compared to 1,000 in the United
States.
BI Intelligence expects the sales of
drones to reach 12 billion by 2021.
That implies a compound annual
growth rate (CAGR) of 7.6%, up from
8.5 billion in 2016.

SERIE FINTECH June 2016 www.centrodeinnovacionbbva.com/en

What are the keys to this

boom?

Which companies lead the

market?

Price is a determining factor.

Low-cost toy drones are gaining
in popularity for recreational
uses. In the US, the Consumer
Electronics Association (CEA)
reports that 700,000 drones
were sold last year, up 63%
from the year before.

In 2015, the consulting

company Frost & Sullivan
estimated that DJI,
headquartered in China, had a
70% share of the market for
commercial and consumer
drones. Their Phantom are
right now the most popular
drones in the world for both
commercial and consumer
uses; they are known for their
reliability and their excellent
photography and video
capture. Although DJI estimated
revenues of more than one
billion dollars for last year,
several smaller players are
seeking to undermine the
dominance of DJI:

BI Intelligence predicts that the

deliveries of consumer drones
all over the world will exceed
7.3 million in 2016, making
them very nearly a product of
general consumption.

SERIE FINTECH June 2016 www.centrodeinnovacionbbva.com/en

3D Robotics, a startup
headquartered in
California, last year
launched its Solo drone (for
800 dollars) for commercial
and consumer applications.
It has high on-board
processing power and can
autonomously carry out
complex flight maneuvers.
For example, users can
make the drone perform a
360 turn, circle an object,
or turn backwards and
forwards by simply pressing
a button on the remote
control. However, it doesn't
include a camera, although
users can install a range of
compatible cameras.

 Lily, also headquartered in California, this year

won an innovation award at the Consumer
Electronics Show (CES) for its drone Lily (priced at
1,000 dollars). The company last month
announced it has 60,000 orders for its
unmanned aircraft, for a total amount of 34
million dollars. The small drone makes videos
autonomously, while it moves around the user
with a small location device.

SERIE FINTECH June 2016 www.centrodeinnovacionbbva.com/en

Yuneec offers a series of high-end drones that

compete with DJI's Phantom 3 series. The
Hong Kong manufacturer is making significant
efforts to give its unmanned aircraft more
autonomous flight capability. For example, it
announced at the CES that the company's
Typhoon H model (priced at 1,700 dollars) will
be equipped with Intel's Realsense technology
to avoid obstacles. What's more, the company
announced it would be the first unmanned
aircraft manufacturer to install Qualcomm's new
Snapdragon flight chips. The chips offer
support for autonomous navigation and
detecting obstacles and help flight autonomy.

 Parrot, a startup based in France, specializes in

low-cost unmanned aircraft for enthusiasts and
beginners. Loro has several toy drones without
cameras, and late last year it also launched the
Bebop 2 (at 550 dollars), a new light version of
their camera-carrying drone. It also unveiled its
fixed-wing Disco drone at this year's CES, which
takes off simply by throwing it in the air and can
land on the ground unaided, making it easy for
beginners.

The GoPro action cameras are the most popular

camera models installed in 3D Robotics drones.
GoPro plans to launch its own unmanned
aircraft, Karma, in late 2016. GoPro has
published very few details about the new model,
but it will probably offer 4K video capture like
many of its competitors' drones. It may also have
the capacity to record 360 videos, which
would set it apart from its competitors. The

SERIE FINTECH June 2016 www.centrodeinnovacionbbva.com/en

recognition of the GoPro name will probably help

the company quickly make a space for itself in
the consumer drone market.

All the models are able to capture aerial videos

and photographs, unlike the smaller toy drones
that can only fly. That makes them very popular
for both consumer applications and video
surveillance drones for companies.

Another point worth noting in that there is now

an overlap on the market between commercial
and consumer drones. For example, the DJI's
Phantom 3 drones are popular among
professional photographers and consumers who
take personal videos and photos.
In 2014, according to ABI Research, camera
drone models accounted for almost 70% of the

SERIE FINTECH June 2016 www.centrodeinnovacionbbva.com/en

unmanned consumer aircraft market. This

market has attracted interest from Intel and
Qualcomm two of the largest manufacturers of
chips in the high-tech industry.
Both companies offer hardware and software
components for drones, including computer chips
designed to help process images. They also
provide cameras such as Intel's Realsense which
are capable of scanning the drone's surroundings
in seconds to help it avoid obstacles.

There is no doubt that the golden age of drones

is dawning.

03

Canarddrones: a
Spanish company
offering airport drones
Created six months ago, the startup believes that the drones will
replace aircraft in airport runway calibration operations.

Two red and two white lights on

the runway. These are the
colors pilots need to see when
they land and which let them
know that their descent angle is
correct. This lighting system is

periodically checked for faults in

airport runway calibration
operations. The runways are
closed so that the aircraft can
run simulations to check that
everything is in working order.

SERIE FINTECH June 2016 www.centrodeinnovacionbbva.com/en

This operation is currently

carried out by a manned plane.
The Spanish startup
Canarddrones hopes that
aircraft will be replaced by
drones.
With a degree in computer
engineering and an MBA from
the IE business school, Jorge
Gmez kicked this idea off one
year ago. He persuaded Ana
Prez (aeronautics engineer),
Rafael Aguado (computer
engineer) and Juan Daz
(telecommunications engineer)
to build a drone that could
perform runway calibration
operations.
"We realized that calibration
was extremely expensive since
it involves an aircraft, a pilot,

closing the runways... And that

there was the possibility of
using drones. We built the
prototype in three months. The
drone simulates the aircraft. It
stands in front of the lighting
system at the top of the runway
and checks whether everything
is okay or whether the lights
need to be adjusted," explains
Juan Daz, the startup's CTO.
Ana Prez, CFO, stresses that
the operation's cost is reduced:
"Using aircraft costs 3000 euros
an hour. If you use a drone,
you don't pay the pilot and
crew from an hour's work, and
you don't pay for moving the
aircraft between airports for
calibration, etc. Using the
drone means flexibility."

SERIE FINTECH June 2016 www.centrodeinnovacionbbva.com/en

According to this aeronautics

engineer with over 10 years of
experience at Airbus, "What's
new is moving from a classical,
well-known procedure that's
been used for a long time to
applying a new way of working
which is advantageous at all
levels: it reduces time and costs
and increases flexibility."
The startup Canarddrones was
formed six months ago and in
that time it has released one
prototype and is about to
launch the second one with 28
minutes of flight time. Daz
points out that "the drone is not
the star of the project. There
are three main players: the
drone; the software (analyzes

all data: sent from the drone,

the positions, camera footage,
etc.); and, last but not least, the
operation's definition since we
are talking about developing a
procedure that currently does
not exist."
According to Ana Prez, "the
drone itself is a product" and,
for this reason, they are
knocking on the door of all
operators and presenting the
project. And even though these
two experts agree that the pace
of the airport world is slow, they
have not sensed any fear from
the pilots. Also, AENA is
interested in the project and
they believe that a public tender
will soon be called.

SERIE FINTECH June 2016 www.centrodeinnovacionbbva.com/en

In the meantime, they are

targeting Holland, where they
have run trials at the airport of
Lelystad. Also, they have been
selected by the accelerator
startupbootcamp and have
received 100,000 euros in
funding to date (50,000 euros
from the European Space
Agency and 50,000 euros from
Finodex). The next step is to
win the first contract and be
able to start working in several
airports. "Drones are the future.
I don't have anything against
pilots but this is the future,"
concludes the aeronautics
engineer.

04

Drones that let

entrepreneurship
take flight
Drones are becoming an everyday tool. They
are easier to handle, legislation is slowly
beginning to create a space for them, and there
is a great variety available on the market for a
range of budgets. Can unmanned aircraft
benefit small startups?
Some of the benefits offered by drones for
boosting entrepreneurship:

SERIE FINTECH June 2016 www.centrodeinnovacionbbva.com/en

Make a corporate video with aerial shots

Corporate videos are always a good form of
promotion. They can give your business a fresh
and modern image that attracts people more
emotionally than rationally. Including aerial shots in
a video shows a panoramic view of the
environment where your business is located: for
example, you can see if it is surrounded by green
areas, is a developing part of the city or is an
innovation zone. Using aerial shots can be seen as
a good sign that you are up-to- date with the latest

SERIE FINTECH June 2016 www.centrodeinnovacionbbva.com/en

trends and the most innovative narratives.

If your business is related to audiovisual
production, having a drone allows you to offer a
service for which demand is actually growing. You
can record original scenes or sell shots that you
have pre-recorded and offer them as an image
bank, a resource that is very commonly used by
the media and advertising agencies.

Broadcast live
Video, in particular live video
from mobile devices, is one of
the key trends of the moment.
If to this you add the
attractiveness of the aerial shots
a drone can take, you will have
a powerful tool in your hands.

Platforms such as YouTube and

the Facebook Live API allow
you to broadcast directly from
different devices, including
drones, as Mark Zuckerberg
himself did during the most
recent conference of Facebook

SERIE FINTECH June 2016 www.centrodeinnovacionbbva.com/en

developers. Direct broadcasts

from events such as
conferences and innovation or
entrepreneurship fairs are a
good way of attracting potential
customers or allies.

Mapping tool
Drones are being used more to observe land.
Using a drone can be very useful for getting a
clear idea of the location of your business and its
surroundings or for preparing plans. If you work in
sectors such as agriculture, a drone can be a good
way of monitoring land, plantations or livestock; in
the industrial sector it can be useful to get a view
of the machinery or the different parts of the
company.

Promotions
Drones are being used to make drops of all kinds
of items, from bombs to food, medicine and lifesaving equipment. What if you used them to
distribute promotional material? This could be an
attractive and inexpensive way of distributing
these kinds of goods, as without doubt it is
unusual and attracts the attention strongly in
events such as fairs, congresses or exhibitions.

SERIE FINTECH June 2016 www.centrodeinnovacionbbva.com/en

Prepare for the era of the mini drones

Although for legal and logistical reasons home
deliveries using drones have not yet been
deployed, everything suggests that in the medium
term this service will become a reality. Companies
such as Amazon, DHL and UPS have for some time
been experimenting with the best way of doing this
on a large scale, and little by little lawmakers are
looking more favorably at an expansion of these
kinds of services.

SERIE FINTECH June 2016 www.centrodeinnovacionbbva.com/en

On a smaller scale, another type of business is

already looking for a way of using drones. This is
the case of a chain of hamburger outlets in
Colombia, which announced a new "mini drone"
service, though because of the current legislation
in the country, they have not been able to
implement it.

Entertainment
Just like executives in large
corporations close million-dollar deals
while they play golf, you can take
advantage of the drone hobby to
relate to other people and have a
pleasant time while flying drones,
racing them, identifying possible
business opportunities or
networking.

SERIE FINTECH June 2016 www.centrodeinnovacionbbva.com/en

05/INFOGRAPHIC
The drones
universe
Unmanned aircraft are taking over the skies: the
figures, keys, market outlook and applications in
this booming technology sector.

Share in Pinterest
SERIE FINTECH June 2016 www.centrodeinnovacionbbva.com/en

Key points

Sales of drones will hit 12 billion

dollars by 2021..

700,000 drones were sold in the

United States in 2015, up 63% from
the previous year.

United States is the largest potential

market for commercial unmanned
aircraft, followed by Europe and China.

The forecast is for over 7.3 million

drones to be delivered to consumers
all over the world in 2016 and for this
figure to reach 29 million by 2021.

The new regulations will allow new

uses for drones, such as Amazon's
long-awaited first airborne delivery
service.

Government uses: military and public

security camera for combat missions,
and helping emergency staff in
dangerous situations or on inaccessible
terrain.

SERIE FINTECH June 2016 www.centrodeinnovacionbbva.com/en

The market
Estimated investment in drones (in billions of dollars)
Government
$14
$12
$10
$8
$6
$4
$2
$0

2015

Consumers

2016

Medium-sized companies

2017

(in billions of dollars) (in millions)

SERIE FINTECH June 2016 www.centrodeinnovacionbbva.com/en

2018

2019

2020

2021

Corporate
The drone market is expanding, with new models aimed at different segments of the consumer and
commercial market, which often overlap. These are the market leaders:
Lily , Yuneed, Parrot, GoPro

Main industries using drones

42,6% Fotography
20,7%
10,9%
8,6%

8%
8,9%

SERIE FINTECH June 2016 www.centrodeinnovacionbbva.com/en

Real Sstate
Publics Services
Construction

Agriculture
Others:
- Education
- Manufacturing
- Emergency
- Insurance
- Administration

Government use
The government market for unmanned aircraft can be divided into two different applications: military, and
the new and growing use of unmanned aircraft for public security.

Main countries exporting military drones

(Percentage increase between 1985 and 2014)

Canada 6.4%

Russia 1.9%

France
1.6%
US 23.9%
Israel 60.7%

SERIE FINTECH June 2016 www.centrodeinnovacionbbva.com/en

share
PREVIOUS ISSUES

INNOVATION
TRENDS
SERIES
BBVA Innovation Center creates
the Innovation Trends Series to
keep you updated with cutting
edge innovation trends and
their appliance to your
everyday life. In this papers you
will find all key facts, analysis,
case studies, interviews with
experts and infographics to
visualize the data that each and
every trend describes.

The struggle for boosting the

female entrepreneurship

The keys in the data analysis

A look at the profile that demand

more companies

Trends aspire to become the starts in

the new year

sguenos:

Register

to keep up
with the lastest
trends

centrodeinnovacionbbva.com

BBVA no se hace responsable de las opiniones publicadas en este documento.