Droning On and On

By admin_45 in Blog Droning On and On

The origin of the word “Drone” as meaning an unmanned aircraft goes all the way back to before World War II. In the mid 1930s, the British developed a remote-piloted aircraft used for anti-aircraft gun practice. The de Havilland DH 82B was a full sized plane and could fly at 100mph for 300 miles. All without a pilot on board.

Its nickname was the “Queen Bee”, so when an American admiral saw it in action in 1935 and requested the development of similar units for US forces, those planes were called “Drones”. The name stuck and it became the official Navy term for a remote-operated aircraft. We’ve included two links at the end of this section if you’d like to learn more - it’s a pretty cool story.

Now, of course, drones are a “next big thing” in disruptive technology.Privately held Chinese company DJI is the market leader in small consumer drones and a variety of small cap companies make the bits and pieces that go into other products. On the defense side, Boeing, Lockheed Martin and Northrop Grumman all have existing products and expertise.

The real investment story may, however, be in what drones can do for the companies that use them. For example:

“So crazy it just might work.” Ford has applied for a patent that uses a drone to provide system redundancy for autonomous vehicles. This solves a serious problem with self-driving cars: what happens when you have a faulty sensor that makes the vehicle unsafe? Leaving passengers stranded isn’t an option. Flying a drone to the car with a backup sensor package at least allows the vehicle to proceed to a repair shop.

“Coming soon to a doorstep near you, very very soon.” The Wall Street Journal reported yesterday that the White House has been pushing the FAA and the private sector to start allowing drone deliveries as soon as possible. At least 10 pilot projects are in the works and some may start as early as May. Some companies that should be in the mix here:

Amazon, which has shipping expenses of an estimated $20 billion/year. Furthermore, industry consultants cite “expensive shipping costs” as the #1 reason for abandoned online shopping carts. Drones could help with both.

A Business Insider article on drones cited UPS as saying that shaving just 1 mile of travel off their 66,000 strong delivery fleet could save the company $50 million pretax.

“Too soon, or too far?” Google got into some hot water with its employees last week when news broke that it is selling its AI image recognition technology to the Pentagon for military drones. Still, it is a reminder that the company has a significant amount of useful technology in the space. It is working with Amazon, Boeing and GE to develop an “Unmanned Traffic Management” system to allow large numbers of drones to safely fly a few hundred feet off the ground. Such a system is actually the most important enabling technology to allow drones to provide scalable business solutions.

We will keep watching this space closely, and its most important investment impacts may be on the ground in the form of how companies use it, rather than up in the sky with the descendants of the “Queen Bee”.

About the original drones:

The story: http://intercepts.defensenews.com/2013/05/the-origin-of-drone-and-why-it-should-be-ok-to-use/

And from the de Havilland Aircraft Museum: http://www.dehavillandmuseum.co.uk/aircraft/de-havilland-dh82b-queen-bee/