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Although consumers are purchasing the majority of unmanned aerial vehicles, enterprises are deploying them toward a more valuable, if currently niche, range of tasks.

The active installed base of nonmilitary unmanned aerial vehicles (UAVs), or drones, costing $200 or more is likely to exceed 1 million units for the first time in 2015. Consumers and prosumers will purchase the majority of the 1 million units expected to sell this year, for industry revenues totaling $800 million to $1.2 billion, Deloitte predicts. While the number of consumers purchasing drones dwarfs that of enterprise adopters, Deloitte maintains they hold tremendous potential value for organizations and the government.

This prediction focuses on three categories of UAVs:

Entry-level hobbyist drones are typically priced at $200 to $500 per kit, have a flying range of up to 160 feet, and can fly at about 10 mph horizontally for up to 20 minutes on an extended battery,¹ although drones in this category tend to run on a simple battery.

Prosumer devices, used by amateur consumers who purchase professional-quality equipment, typically cost $750 to $1,500 per kit,² have a range of up to 3,000 feet, can fly at around 20 mph, and can remain airborne for up to 25 minutes. These devices tend to be capable of carrying a high-definition camera but little more.

Enterprise models, capable of transporting a payload weighing a few pounds, typically cost $10,000 or more. These models can be optimized to lift and carry up to 6 pounds or, if optimized for flight, to remain airborne for an hour.

In business use cases, UAVs provide some of the observational or transportation functionality of a helicopter with a starting price point of around $1,000, and without the cost of an onboard pilot, enabling organizations to undertake tasks that were previously too expensive to consider. For example:

Drones offer fantastic possibilities for enterprises and consumers, and will be used for an increasingly diverse range of observation applications. But a massive surge in demand for UAVs in the short and medium term is unlikely due to three key factors:

Drones crash. Flying drones can be challenging and crashes are common. While an individual can fly a drone within minutes of assembly, even experienced pilots can suddenly lose control.⁵ Plotting the course for a drone is simple using an online map and GPS, but GPS signals can be lost if a building blocks the signal or clouds are dense. Drones also have a propensity to crash because of pilot error or mechanical failure.

Regulation is uncertain. In some markets, UAV regulation is imminent, while in others, drones come under the same rules as remote control aircrafts. There were 25 reported near misses involving UAVs and piloted planes at altitudes of several thousand feet between June and November 2014 in the U.S., some involving large passenger planes. This year, drones have continued to make negative headlines, such as crashing into sports venues, interfering with firefighting efforts, and causing problems near major airports. A laissez faire approach from regulators looks increasingly unlikely. The Federal Aviation Administration has published an initial plan to integrate unmanned vehicles into U.S. airspace regulation. Controls can cover the height drones can attain, the distance they can fly from the operator, the required distance between the vehicle and people, and the necessary qualifications of the pilot. A likely outcome in many markets is that UAVs will be integrated into current flight control systems.⁶

Cost and capability. We expect enterprise and government usage of UAVs to spread, where regulation permits, but for each entity to use only a few drones per task. Applications that traditionally require visual inspection—assessing the condition of high-rise buildings by asking people to scale towers or erect scaffolding, for example—may benefit from using drones instead. We do not expect drones to be deployed on a massive scale to replace existing vehicles for delivery. The use of drones to transport goods will happen occasionally but will not be commonplace, and is unlikely to be viable for anything aside from high-value, lightweight, and compact packages. Moreover, an unmanned UAV needs a lot of human support around it: While drones can transport a package, the package may require a signature or need to be re-routed to a neighbor.

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Although enterprise uptake of drones has not been the focus of most media attention, organizations in many industries are already finding immediate uses for the capabilities of these aerial vehicles. The promise is tantalizing, but for the foreseeable future, cost, regulation, and the challenges of flying drones may constrain their growth. CIOs should stay alert to developments in the regulatory space and be particularly aware of legislation regarding drone pilots and the ability to fly these vehicles out of line of sight.

—by Paul Lee, head of global TMT research, Deloitte Touche Tohmatsu Limited.

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