SERIE INNOVATION TRENDS

DRONESIT’S TIME FOR

TECHNOLOGY, MARKET

AND REGULATION

DRIVING UNMANNED

AIRCRAFT

Canarddrones: a Spanish company offering airport drones

01 Drones conquerthe skies 02 Who's leading

the drone market?

03

04 05 INFOGRAFÍA

Universo dronesDrones that let entrepreneurship take flight

Drones conquer the US skies

01

New US legislation eases the law applicable to

unmanned aircraft, although questions of the security

and privacy of commercial operations that use drones

to deliver products remain up in the air.

SERIE FINTECH · June 2016 · www.centrodeinnovacionbbva.com/en

The US skies are opening up to

drones for commercial use. The

United States has announced

new regulations applicable to

unmanned aircraft. On June 21

the Federal Aviation

Administration (FAA) published

new rules applicable in the

United States that greatly

reduce limitations on drones

weighing less than 25 kilos.

Previously, drone users had to

have a pilot's license and

request flight authorizations.

Now these requirements have

been lifted: drones will have to

be registered and users will

have to pass a skills test every

two years. Authorization will still

be required in sensitive areas,

particularly those located close

to airports, but the

Administration has undertaken

to respond to applications

within ten days.

Drones for commercial use will

have to fly not higher than a

maximum limit of 122 meters

(400 feet) (compared with the

150 meters in France or 120

meters in Spain), and remain

within the operator's line of

sight without moving over

densely populated areas.

SERIE FINTECH · June 2016 · www.centrodeinnovacionbbva.com/en

The announcement of this

regulation has been well

received by all the parties

involved. "I regard it as a

significant milestone," said Brian

Wynne, president of AUVSI (the

Association for Unmanned

Vehicle Systems International),

which represents the main

companies in the sector. "This is

just the beginning of this

process. And obviously we're

going to continue to work

closely with private sector

entities... because the President

has made clear that the future

success of our economy will

depend on our ability to

continue to innovate,"

highlighted Josh Earnest,

President Obama's Press

Secretary.

However, the new rules do not

mention the question of

deliveries using drones.

Amazon, Alphabet (formerly

Google), Walmart and the

Chinese company Alibaba have

major projects underway and

the FAA has already awarded

licenses for some of these

companies to carry out tests.

The White House has noted

that talks are already being held

to develop regulations in this

area.

The FAA has more or less

opened the door by indicating

that the procedures for

obtaining a waiver (the

government agency has already

granted thousands) will be

simplified. In fact, currently it

would be premature to legislate

on the question of drone

deliveries. The operators still

do not have a system of

automated management of

low-altitude air traffic, on

which NASA is working with

multiple startups. They have still

not been developed for major

distribution companies.

SERIE FINTECH · June 2016 · www.centrodeinnovacionbbva.com/en

The rules also do not deal with the issue of

security and privacy, which as this editorial in The

New York Times notes, is a matter of concern: “But

as drones have become smaller, cheaper and more

numerous — some popular consumer models sell

for less than $1,000 — policy makers have had to

address potential problems. These machines can

obviously be put to good use - say, inspecting

cellphone towers, shooting movies or compiling

multidimentional real-estate portfolios. They can

also be used to snoop on people and harass

them. And they can threaten other aircraft."

The US daily highlights that "some regulation of the

private and commercial use of drones thus seems

inevitable. The task for regulators is how to protect

privacy and promote safety without infringing on

the First Amendment rights of citizens and

businesses that wish to use drones for legitimate

purposes, like photography or news gathering."

It notes that "many privacy advocates are also

worried that drones used by businesses will collect

information like wireless signals emitted by

cellphones that could be used to determine

people’s locations. One marketing company did just

that last year in Los Angeles." Nevertheless, it

points out that "The public’s desire for clear rules is

understandable. Still, policy makers should not

make it so difficult to use drones that they end up

limiting the First Amendment rights of filmmakers,

activists and journalists.”

SERIE FINTECH · June 2016 · www.centrodeinnovacionbbva.com/en

02Who's leading the drone market?Commercial drones are taking over the market. The first barrier –price–

is now disappearing, thanks to interest from companies and consumers.

The figures bear out the attraction of unmanned aircraft: deliveries of

drones to consumers all over the world is expected to exceed 7.3

million in 2016 and to hit 29 million by 2021.

SERIE FINTECH · June 2016 · www.centrodeinnovacionbbva.com/en

United States is the largest potential

market for commercial unmanned

aircraft, followed by Europe and

China. Paradoxically, the US has

historically trailed behind Europe in

terms of drone uptake, due to the

slow progress of its regulations.

Europe had over 2,500 commercial

drone operators in July 2015,

compared to 1,000 in the United

States.

BI Intelligence expects the sales of

drones to reach 12 billion by 2021.

That implies a compound annual

growth rate (CAGR) of 7.6%, up from

8.5 billion in 2016.

SERIE FINTECH · June 2016 · www.centrodeinnovacionbbva.com/en

What are the keys to this

boom?

Price is a determining factor.

Low-cost toy drones are gaining

in popularity for recreational

uses. In the US, the Consumer

Electronics Association (CEA)

reports that 700,000 drones

were sold last year, up 63%

from the year before.

BI Intelligence predicts that the

deliveries of consumer drones

all over the world will exceed

7.3 million in 2016, making

them very nearly a product of

general consumption.

Which companies lead the

market?

In 2015, the consulting

company Frost & Sullivan

estimated that DJI,

headquartered in China, had a

70% share of the market for

commercial and consumer

drones. Their Phantom are

right now the most popular

drones in the world for both

commercial and consumer

uses; they are known for their

reliability and their excellent

photography and video

capture. Although DJI estimated

revenues of more than one

billion dollars for last year,

several smaller players are

seeking to undermine the

dominance of DJI:

• 3D Robotics, a startup

headquartered in

California, last year

launched its Solo drone (for

800 dollars) for commercial

and consumer applications.

It has high on-board

processing power and can

autonomously carry out

complex flight maneuvers.

For example, users can

make the drone perform a

360° turn, circle an object,

or turn backwards and

forwards by simply pressing

a button on the remote

control. However, it doesn't

include a camera, although

users can install a range of

compatible cameras.

SERIE FINTECH · June 2016 · www.centrodeinnovacionbbva.com/en

• Lily, also headquartered in California, this year

won an innovation award at the Consumer

Electronics Show (CES) for its drone Lily (priced at

1,000 dollars). The company last month

announced it has 60,000 orders for its

unmanned aircraft, for a total amount of 34

million dollars. The small drone makes videos

autonomously, while it moves around the user

with a small location device.

• Yuneec offers a series of high-end drones that

compete with DJI's Phantom 3 series. The

Hong Kong manufacturer is making significant

efforts to give its unmanned aircraft more

autonomous flight capability. For example, it

announced at the CES that the company's

Typhoon H model (priced at 1,700 dollars) will

be equipped with Intel's Realsense technology

to avoid obstacles. What's more, the company

announced it would be the first unmanned

aircraft manufacturer to install Qualcomm's new

Snapdragon flight chips. The chips offer

support for autonomous navigation and

detecting obstacles and help flight autonomy.

SERIE FINTECH · June 2016 · www.centrodeinnovacionbbva.com/en

• Parrot, a startup based in France, specializes in

low-cost unmanned aircraft for enthusiasts and

beginners. Loro has several toy drones without

cameras, and late last year it also launched the

Bebop 2 (at 550 dollars), a new light version of

their camera-carrying drone. It also unveiled its

fixed-wing Disco drone at this year's CES, which

takes off simply by throwing it in the air and can

land on the ground unaided, making it easy for

beginners.

• The GoPro action cameras are the most popular

camera models installed in 3D Robotics drones.

GoPro plans to launch its own unmanned

aircraft, Karma, in late 2016. GoPro has

published very few details about the new model,

but it will probably offer 4K video capture like

many of its competitors' drones. It may also have

the capacity to record 360° videos, which

would set it apart from its competitors. The

recognition of the GoPro name will probably help

the company quickly make a space for itself in

the consumer drone market.

SERIE FINTECH · June 2016 · www.centrodeinnovacionbbva.com/en

All the models are able to capture aerial videos

and photographs, unlike the smaller toy drones

that can only fly. That makes them very popular

for both consumer applications and video

surveillance drones for companies.

Another point worth noting in that there is now

an overlap on the market between commercial

and consumer drones. For example, the DJI's

Phantom 3 drones are popular among

professional photographers and consumers who

take personal videos and photos.

In 2014, according to ABI Research, camera

drone models accounted for almost 70% of the

unmanned consumer aircraft market. This

market has attracted interest from Intel and

Qualcomm –two of the largest manufacturers of

chips in the high-tech industry.

Both companies offer hardware and software

components for drones, including computer chips

designed to help process images. They also

provide cameras –such as Intel's Realsense– which

are capable of scanning the drone's surroundings

in seconds to help it avoid obstacles.

There is no doubt that the golden age of drones

is dawning.

SERIE FINTECH · June 2016 · www.centrodeinnovacionbbva.com/en

Two red and two white lights on

the runway. These are the

colors pilots need to see when

they land and which let them

know that their descent angle is

correct. This lighting system is

periodically checked for faults in

airport runway calibration

operations. The runways are

closed so that the aircraft can

run simulations to check that

everything is in working order.

03

Created six months ago, the startup believes that the drones will

replace aircraft in airport runway calibration operations.

Canarddrones: a Spanish company offering airport drones

SERIE FINTECH · June 2016 · www.centrodeinnovacionbbva.com/en

This operation is currently

carried out by a manned plane.

The Spanish startup

Canarddrones hopes that

aircraft will be replaced by

drones.

With a degree in computer

engineering and an MBA from

the IE business school, Jorge

Gómez kicked this idea off one

year ago. He persuaded Ana

Pérez (aeronautics engineer),

Rafael Aguado (computer

engineer) and Juan Díaz

(telecommunications engineer)

to build a drone that could

perform runway calibration

operations.

"We realized that calibration

was extremely expensive since

it involves an aircraft, a pilot,

closing the runways... And that

there was the possibility of

using drones. We built the

prototype in three months. The

drone simulates the aircraft. It

stands in front of the lighting

system at the top of the runway

and checks whether everything

is okay or whether the lights

need to be adjusted," explains

Juan Díaz, the startup's CTO.

Ana Pérez, CFO, stresses that

the operation's cost is reduced:

"Using aircraft costs 3000 euros

an hour. If you use a drone,

you don't pay the pilot and

crew from an hour's work, and

you don't pay for moving the

aircraft between airports for

calibration, etc. Using the

drone means flexibility."

SERIE FINTECH · June 2016 · www.centrodeinnovacionbbva.com/en

According to this aeronautics

engineer with over 10 years of

experience at Airbus, "What's

new is moving from a classical,

well-known procedure that's

been used for a long time to

applying a new way of working

which is advantageous at all

levels: it reduces time and costs

and increases flexibility."

The startup Canarddrones was

formed six months ago and in

that time it has released one

prototype and is about to

launch the second one with 28

minutes of flight time. Díaz

points out that "the drone is not

the star of the project. There

are three main players: the

drone; the software (analyzes

all data: sent from the drone,

the positions, camera footage,

etc.); and, last but not least, the

operation's definition since we

are talking about developing a

procedure that currently does

not exist."

According to Ana Pérez, "the

drone itself is a product" and,

for this reason, they are

knocking on the door of all

operators and presenting the

project. And even though these

two experts agree that the pace

of the airport world is slow, they

have not sensed any fear from

the pilots. Also, AENA is

interested in the project and

they believe that a public tender

will soon be called.

In the meantime, they are

targeting Holland, where they

have run trials at the airport of

Lelystad. Also, they have been

selected by the accelerator

startupbootcamp and have

received 100,000 euros in

funding to date (50,000 euros

from the European Space

Agency and 50,000 euros from

Finodex). The next step is to

win the first contract and be

able to start working in several

airports. "Drones are the future.

I don't have anything against

pilots but this is the future,"

concludes the aeronautics

engineer.

SERIE FINTECH · June 2016 · www.centrodeinnovacionbbva.com/en

Drones are becoming an everyday tool. They

are easier to handle, legislation is slowly

beginning to create a space for them, and there

is a great variety available on the market for a

range of budgets. Can unmanned aircraft

benefit small startups?

Some of the benefits offered by drones for

boosting entrepreneurship:

Drones that let entrepreneurship take flight

04

SERIE FINTECH · June 2016 · www.centrodeinnovacionbbva.com/en

Corporate videos are always a good form of

promotion. They can give your business a fresh

and modern image that attracts people more

emotionally than rationally. Including aerial shots in

a video shows a panoramic view of the

environment where your business is located: for

example, you can see if it is surrounded by green

areas, is a developing part of the city or is an

innovation zone. Using aerial shots can be seen as

a good sign that you are up-to- date with the latest

trends and the most innovative narratives.

If your business is related to audiovisual

production, having a drone allows you to offer a

service for which demand is actually growing. You

can record original scenes or sell shots that you

have pre-recorded and offer them as an image

bank, a resource that is very commonly used by

the media and advertising agencies.

Make a corporate video with aerial shots

SERIE FINTECH · June 2016 · www.centrodeinnovacionbbva.com/en

Video, in particular live video

from mobile devices, is one of

the key trends of the moment.

If to this you add the

attractiveness of the aerial shots

a drone can take, you will have

a powerful tool in your hands.

Platforms such as YouTube and

the Facebook Live API allow

you to broadcast directly from

different devices, including

drones, as Mark Zuckerberg

himself did during the most

recent conference of Facebook

developers. Direct broadcasts

from events such as

conferences and innovation or

entrepreneurship fairs are a

good way of attracting potential

customers or allies.

Broadcast live

SERIE FINTECH · June 2016 · www.centrodeinnovacionbbva.com/en

Mapping tool

Drones are being used more to observe land.

Using a drone can be very useful for getting a

clear idea of the location of your business and its

surroundings or for preparing plans. If you work in

sectors such as agriculture, a drone can be a good

way of monitoring land, plantations or livestock; in

the industrial sector it can be useful to get a view

of the machinery or the different parts of the

company.

Promotions

Drones are being used to make drops of all kinds

of items, from bombs to food, medicine and life-

saving equipment. What if you used them to

distribute promotional material? This could be an

attractive and inexpensive way of distributing

these kinds of goods, as without doubt it is

unusual and attracts the attention strongly in

events such as fairs, congresses or exhibitions.

SERIE FINTECH · June 2016 · www.centrodeinnovacionbbva.com/en

Prepare for the era of the mini drones

Although for legal and logistical reasons home

deliveries using drones have not yet been

deployed, everything suggests that in the medium

term this service will become a reality. Companies

such as Amazon, DHL and UPS have for some time

been experimenting with the best way of doing this

on a large scale, and little by little lawmakers are

looking more favorably at an expansion of these

kinds of services.

On a smaller scale, another type of business is

already looking for a way of using drones. This is

the case of a chain of hamburger outlets in

Colombia, which announced a new "mini drone"

service, though because of the current legislation

in the country, they have not been able to

implement it.

SERIE FINTECH · June 2016 · www.centrodeinnovacionbbva.com/en

Entertainment

Just like executives in large

corporations close million-dollar deals

while they play golf, you can take

advantage of the drone hobby to

relate to other people and have a

pleasant time while flying drones,

racing them, identifying possible

business opportunities or

networking.

SERIE FINTECH · June 2016 · www.centrodeinnovacionbbva.com/en

05/INFOGRAPHIC

Unmanned aircraft are taking over the skies: the

figures, keys, market outlook and applications in

this booming technology sector.

The drones universe

Share in Pinterest

SERIE FINTECH · June 2016 · www.centrodeinnovacionbbva.com/en

Key points

Sales of drones will hit 12 billion

dollars by 2021..

700,000 drones were sold in the

United States in 2015, up 63% from

the previous year.

United States is the largest potential

market for commercial unmanned

aircraft, followed by Europe and China.

The forecast is for over 7.3 million

drones to be delivered to consumers

all over the world in 2016 and for this

figure to reach 29 million by 2021.

The new regulations will allow new

uses for drones, such as Amazon's

long-awaited first airborne delivery

service.

Government uses: military and public

security camera for combat missions,

and helping emergency staff in

dangerous situations or on inaccessible

terrain.

SERIE FINTECH · June 2016 · www.centrodeinnovacionbbva.com/en

The market

Estimated investment in drones (in billions of dollars)

(in billions of dollars) (in millions)

SERIE FINTECH · June 2016 · www.centrodeinnovacionbbva.com/en

2015 2016 2017 2018 2019 2020 2021

$14

$12

$10

$8

$6

$4

$2

$0

Government Consumers Medium-sized companies

CorporateThe drone market is expanding, with new models aimed at different segments of the consumer and commercial market, which often overlap. These are the market leaders:

Lily , Yuneed, Parrot, GoPro…

%

Main industries using drones

Fotography42,6%

Real Sstate20,7%

Publics Services10,9%

Construction8,6%

Agriculture8%

Others: - Education- Manufacturing- Emergency- Insurance- Administration

8,9%

SERIE FINTECH · June 2016 · www.centrodeinnovacionbbva.com/en

Government useThe government market for unmanned aircraft can be divided into two different applications: military, and the new and growing use of unmanned aircraft for public security.

Main countries exporting military drones(Percentage increase between 1985 and 2014)

US 23.9%

Israel 60.7%

Canada 6.4%

France1.6%

Russia 1.9%

SERIE FINTECH · June 2016 · www.centrodeinnovacionbbva.com/en

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