April 7, 2017
As dawn broke on China’s southern Hainan Island, Yang Daozhu clambered up a metal stepladder for a better view over the cornfields, remote control in hand. Wearing a blue surgical mask and rubber boots, the 30-year-old was soon steering a 120-pound DJI drone back and forth above the yellow-tipped stalks, flipping a switch to spray them with a mist of pesticide. About 100 feet away, a co-worker did the same from the ground, occasionally climbing onto a blue truck. By noon they’d covered the same stretch of field it’d have taken four or five workers a week to spray with traditional crank-operated backpack dispensers.
This is a typical day for Hainan China Agriculture and Flight Service, a year-old company with about 50 employees that’s sprung up to fill a niche. “It’s harder to find people to spray pesticides in the old way,” says Zhang Yourong, the farmer who manages these cornfields. “Young people want to leave the farms and find better jobs in cities now.” Yang’s boss, former realtor Liang Lvsheng, says he’s also interested in using drones to map farms from the sky, a way to spot pests or other problems more quickly.
Zoom out a little more, and a broader business plan starts to come into focus. Drones are becoming less of a casual hobby and more like commercial and industrial equipment, and DJI, the world’s leading maker of the little buggers, is working a lot harder to make sure it can meet the market’s changing wishes. DJI makes the Agras-MG1 drones spraying the fields on Hainan, Matrice 200 drones for industrial surveying, and Inspire drones for high-end filmmaking, and it’s got 25 percent of its 8,000 staffers working on research and development to make sure potential rivals don’t spot an area it’s missed.
“Our iteration cycle is about six months,” says Paul Pan, senior product manager at DJI. “We can completely control the supply chain. We have our own factories and can do our own prototyping.” Eleven-year-old DJI more or less invented the modern civilian drone industry when it introduced its first Phantom in 2012. Valued at $10 billion, the Chinese company makes 60 percent to 65 percent of all nonmilitary drones shipped around the world, according to researcher Frost & Sullivan. It’s maintained its lead partly through smart branding and partnerships, getting its photography-focused Phantom models into more than 400 Apple Stores.
But it’s tough to maintain momentum with hardware alone. Even Apple Inc. is focusing more of its attention on software and services, like its music streaming service and app store. And as with the smartphone industry, highend drones such as DJI’s may be vulnerable to cheaper or more focused rivals, especially in China. On the upper end, EHang Inc. is working on people carrying drones that resemble George Jetson’s ship. On the low end, startup FPV Style makes $100 indoor drones for kids. FPV founder Max Ma says his prototype weighs less than an ounce, and the finished product will be lighter.
“DJI has been brilliant at making flying cameras, but that’s not all that drones are or can be,” says Eric Pan (no relation to Paul), head of Seeed Studio, a Shenzhen hardware accelerator.
As a drone guides itself back and forth across a soccer field near DJI’s gleaming Shenzhen headquarters, surrounded by skyscrapers, Paul Pan is thinking about what comes next. He’s been refining the AgrasMG1’s ability to fly a preset path and adjust for wind. “Even for a farmer with minimal training, this makes it very easy to use and to spray evenly and consistently,” he says. DJI is also working with data services that stitch together data from GPS and the drones’ sensors to create 3D maps of fields, allowing the programmed paths to account for hills.
The market for drone hardware will hit $6 billion this year and $11.2 billion by the end of 2020, estimates researcher Gartner Inc. The market for software and services is expected to grow a lot faster. So DJI is also pushing developers to dream up new apps and uses for its drone operating system, says Michael Perry, director of business development. The company says it’s not making its OS available for rivals’ drones.
The bottom line: China’s DJI says 25 percent of its workforce is in R&D as it tries to extend its dominance of the civilian drone business.
(Click here for accompanying video by Bloomberg’s Robin Fall and Vicky Feng.)