Amazon gives Prime Air public demo (AMZN)

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At its robotics conference in California, Amazon demonstrated its Prime Air drone delivery system, The Verge reported.

This was the first public flight its drones have taken in the US, according to Amazon.

The fully autonomous drone completed its delivery successfully, illustrating how far drones have come, but also pointing to the parts of the drone ecosystem that will need to develop — drone management and the regulatory space — before drone delivery can get off the ground.

Amazon has been developing drones for years, and the hardware has matured to allow for numerous tests, in the US and beyond. Other companies have also been working to develop drones for use in a delivery service; 7-Eleven launched a trial program in Nevada, China’s JD.com began deliveries in the Jiangsu province, and Alphabet partnered with Chipotle and Virginia Tech University to deliver burritos to the campus in a proof of concept test. The French postal service also began experimenting with parcel delivery for hard-to-reach locations in the mountainous Provence region.

While constantly improving, drone hardware isn't what's holding back the development of drone delivery services. Rather, there are two primary areas that are preventing drone delivery from hitting the commercial market:

• Drone support and management services. Companies carrying out drone delivery will not just be flying one drone at a time, but rather operating fleets of aircraft. These drones will need to be managed by the delivery company, which will have to oversee things like parcel pickup, battery charge level, and airspace management. Major companies like Verizon are building up drone management portfolios, while startups like DroneDeploy have raised funding and brought on personnel. As these companies look to facilitate the growth of drones, companies interested in drone delivery will need to work with drone management providers or develop solutions in-house to allow their drones to carry out delivery operations.
• Regulation. Drones are aircraft, and subject to regulation from bodies like the US’ Federal Aviation Authority (FAA). Aircraft need permission from the FAA to fly, and thus far, the FAA doesn't permit commercial drone use. This is one of the main reasons that US-based companies like Amazon have conducted initial tests outside the US, where authorities act with more flexibility. The FAA has been tasked with issuing a regulatory framework for commercial drone delivery in 2018, which ought to eliminate that hurdle and pave the way for the beginning of such programs in the US.

Drones turned the corner in 2015 to become a popular consumer device, while a framework for regulation that legitimizes drones in the US began to take shape. Technological and regulatory barriers still exist to further drone adoption.

Drone manufacturers and software providers are quickly developing technologies like geo-fencing and collision avoidance that will make flying drones safer. The accelerating pace of drone adoption is also pushing governments to create new regulations that balance safety and innovation.

Safer technology and better regulation will open up new applications for drones in the commercial sector, including drone delivery programs like Amazon’s Prime Air and Google’s Project Wing initiatives.

BI Intelligence, Business Insider's premium research service, has compiled a detailed drones report that forecasts sales revenues for consumer, enterprise, and military drones. It also projects the growth of drone shipments for consumers and enterprises.

The report details several of world’s major drone suppliers and examines trends in drone adoption among several leading industries. Finally, it examines the regulatory landscape in several markets and explains how technologies like obstacle avoidance and drone-to-drone communications will impact drone adoption.

Here are some of the key takeaways from the report:

• We project revenues from drones sales to top $12 billion in 2021, up from just over $8 billion last year.
• Shipments of consumer drones will more than quadruple over the next five years, fueled by increasing price competition and new technologies that make flying drones easier for beginners.
• Growth in the enterprise sector will outpace the consumer sector in both shipments and revenues as regulations open up new use cases in the US and EU, the two biggest potential markets for enterprise drones.
• Technologies like geo-fencing and collision avoidance will make flying drones safer and make regulators feel more comfortable with larger numbers of drones taking to the skies.
• Right now FAA regulations have limited commercial drones to a select few industries and applications like aerial surveying in the agriculture, mining, and oil and gas sectors.
• The military sector will continue to lead all other sectors in drone spending during our forecast period thanks to the high cost of military drones and the growing number of countries seeking to acquire them.

In full, the report:

• Compares drone adoption across the consumer, enterprise, and government sectors.
• Breaks down drone regulations across several key markets and explains how they’ve impacted adoption.
• Discusses popular use cases for drones in the enterprise sector, as well as nascent use case that are on the rise.
• Analyzes how different drone manufacturers are trying to differentiate their offerings with better hardware and software components.
• Explains how drone manufacturers are quickly enabling autonomous flight in their products that will be a major boon for drone adoption.

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