Apple recently unveiled prominent new retail displays for DJI 's Phantom 4 drone at over 400 of its brick-and-mortar stores. The large "feature bay" displays include big signs, hands-on demo models, and lots of shelf space for DJI's drones and accessories. DJI employees are also visiting select Apple stores to provide customers with hands-on drone training sessions.
Continue Reading Below
DJI drone displays and demos at Apple Stores. Source: DJI.
Through the use of new cameras and sensors, the $1,400 Phantom 4 features advanced autopilot, auto-follow, and object avoidance capabilities. Unlike older Phantoms, which were compatible with GoPro's cameras, the Phantom 4 uses DJI's own wide-angle 4K camera. Apple will be the exclusive third-party retailer of the Phantom 4 during its launch, but DJI will expand its availability to other retailers over the next few weeks.
The DJI displays represent Apple's biggest promotion of third-party products ever, and highlights the growing popularity of DJI's flagship drones. It also spells big trouble for GoPro, which desperately needs its upcoming Karma drone to effectively compete against DJI's market-leading drones.
What does DJI's Apple deal mean for GoPro?
DJI launched its first Phantom drone in 2013, and recently opened its first brick-and-mortar flagship store in Shenzhen, China. The company hasn't disclosed how much revenue it generated last year, but it previously expected its 2015 sales todouble to $1 billion.
DJI's flagship store in China. Source: DJI.
Continue Reading Below
GoPro, which has been struggling with sluggish demand for action cameras, declared that it would enter the drone market last year. The company promises to launch its Karma drone during the "first half" of 2016, but it has since only released two teaser videos with no technical details. If the Karma fails to impress drone users, GoPro's sales could drop a lot more than the 15% decline analysts expect for 2016.
U.S. officials estimate that around one million consumer drones were sold across the country during last year's holiday season. That figure likely includes lots of drones from market leaders DJI, 3D Robotics, Parrot, and PrecisionHawk.Therefore, entering the market after last year's holiday season andthe Phantom 4's launch could be a poorly timed move for GoPro, since many potential customers probably bought one of those other drones instead.
Why DJI and Apple are naturally compatible
During a presentation in early March, DJI director of strategic partnerships Michael Perry declared that most of his company's customers already use Apple devices to control, shoot, and edit drone footage.
With the Phantom 4, iOS users can select an on-screen object they want to "follow", and the drone will automatically follow it while avoiding obstacles.Moreover, DJI and Apple respectively sell "premium" drones and mobile devices, so the average DJI drone buyer is likely willing to buy the latest iPhone, and vice versa.
That's not to say that GoPro lacks comparable advantages. Apple also sells GoPro cameras at its brick-and-mortar and online stores, albeit with less prominent displays. The same customers who buy pricey iPhones or DJI drones might also be willing to spend up to $500 on an action camera. But unless the Karma is a truly innovative device, I doubt that Apple will give it as much floor space as DJI's Phantom 4.
Waiting and speculating
For now, all GoPro investors can do is speculate about what the Karma will actually offer. During CES 2016, GoPro CEO Nick Woodman declared that the drone willbe "backwards compatible" with older GoPro devices. That statement indicates that it will likely be sold as an accessory to boost Hero sales.
The second Karma video (seen below), which the company uploaded in early February, seemingly indicates that the drone can be "thrown" into the air to track the user. If that's true, the device might be more compact than DJI's drones with similar following capabilities. However, none of that can be confirmed until GoPro actually demonstrates a working model.
Time is running out
GoPro conquered the action camera market with a first mover's advantage. By the time other camera companies launched competing devices, the word "GoPro" had become synonymous with action cameras. DJI accomplished the same thing with drones. Now that Apple is bolstering DJI's reputation with big store promotions, GoPro could be missing its chance to grab a meaningful share of the drone market.
The article With Apple, Inc. Promoting DJI, GoPro Faces an Uphill Drone Battle originally appeared on Fool.com.
Leo Sun has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Apple and GoPro. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright 1995 - 2016 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.