DJI's Mavic Air Solidifies Position at Top of Food Chain
The drone market has, for lack of a better phrase, had its ups and downs. As the emerging market transformed squarely into a mainstream one - even if it still has flashes of being pretty niche - the heavyweights have started to grab more power.
And right now, DJI is playing king on the hill with a few manufacturers and winning. Following a very successful Consumer Electronics Showing, DJI today announced the smartphone-sized $799 Mavic Air, that compliments their $399 Spark and $999 Mavic Pro.
Glancing at the specs, the Mavic Air feels super premium as well. The 430-gram drone (41% lighter than the Mavic Pro) sports a 32-MP panoramic sphere, 3-axis gimbal, 4K Camera, 3D environment sensing, and a 21-minute flight time. Although it is a massive upgrade from the expectedly underpowered Spark, it might be a little stronger than the Mavic Pro. Redesigned ventilation means the drone not only looks better but it will fly longer as well.
The release of the Mavic Air speaks volumes about the current state of the industry. Not only is DJI's market share suffocating competitors, but its verticals in gimbals and professional equipment are also starting to pay off as well.
That being said, the biggest problem with the drone industry as a whole is many major companies are not publicly held, and most are located in China. This makes data hard to find, but not impossible. Research firm Gartner estimates that global drone revenue is at $4.5 billion, selling nearly 2.2 million drones in 2017. On the other hand, the Consumer Technology Association says that 2.4 million drones were sold in the United States alone last year. However, the FAA estimated more than 1.1 million as of March. The mismatched information comes from different definitions of drones, or rather their weight. Some reports will include drones under 250 grams, or that don't need to be registered by the FAA.
Either way, DJI is estimated at a reported $10 billion valuation and has already caused two of its competitors in GoPro and 3DR to shutter their drone programs entirely. Even international competitors in Parrot and Yuneec have suffered layoffs thanks to DJI's nimble retail prices and ability to expand quickly.
And now that they have begun to work out partnerships with their old competitor 3DR - which lead to a partnership with Sony - and land an exclusive with Apple to put their drone in almost every store, DJI seemed all but unstoppable. If you look at every reason it's competition has failed, DJI was indirectly involved. They are more affordable, better quality, and more innovative.
"The business lesson here is, don’t telegraph your moves to the industry — especially if you’re not a big player,” says Gerald Van Hoy, an independent consultant, and analyst who covers the drone industry. “DJI is positioned well. They take advantage of everything that’s given to them, and they run with it — that’s why it’s hard to compete with them toe to toe. The only way you beat those guys is you come in quiet."
But DJI's success doesn't come without one giant caveat. If you look at the problems of these failed companies, and other organizations that are going belly up in emerging markets, they all have a common theme. Their products are built for a prosumer audience that eventually fell out of the niche. In GoPro's case, their action cameras hit the wrong prices, and we're probably built too well which meant you never had to buy another one. Or maybe look at the popularity of Polaroid, a $3 billion company that is still trying to sell their point-shoot-and-shake camera. Not even Apple could resuscitate a hemorrhaging smartwatch market.
Although it feels like apples to oranges, there is something about overinvesting a niche market that can come to bite a company in the end. DJI's vertical expansions may combat that temporarily, but if the market never expands to mainstream adoption, the sky may fall on them.