Drones in 2016: 4 Numbers Everyone Should Know

By Leo SunFool.com

Drones are a hot topic in the tech world these days. Hobbyists are flying them; governments are deploying them for surveillance and military purposes; and companies want to use them for automated tasks. To better understand this market, let's highlight four key numbers everyone should know.

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DJI Phantom 3 Professional. Source: DJI

One millionU.S. officials estimate that nearly one million consumer drones were sold in the U.S. lastholiday season. Back in November 2014, drone maker 3D Robotics estimated that 500,000 units had beensold in the U.S. to date.

That sharp sales surge is encouraging for drone makers, but it's troubling for FAA regulators. Last December, the FAA required all new owners of drones between 0.55 and 55 pounds to register their devices. But by early February, only 325,000 drones had been registered, indicating that a lot of unregistered drones are still airborne. An increased number of drones could also be hazardous to passenger aircraft.

$5.6 billionResearch firm Markets and Markets estimates that theglobal drone market will grow at a compound annual growth rate of 32% between 2015 and 2020 into a $5.6 billion industry. The firm estimates that among applications, precision agricultural drones will enjoy the highest demand with a CAGR of 42% during that period. Other popular applications will include law enforcement, media production, retail, inspection, mapping services, and education.

In terms of geographic growth, the firm estimates that demand for drones will be the strongest in the Asia-Pacific region, which could post a CAGR of 38% between 2015 and 2020. The top players in this market are Chinese drone maker DJI Innovations, French company Parrot, and American firms 3D Robotics and PrecisionHawk.

$10 billionOut of those four companies, DJI is the biggest. Last May, it wasvalued at $10 billion -- nearly six times the current market cap of GoPro , which will launch its first drone later this year. DJI previously forecast that its sales would double from $500 million in 2014 to $1 billion in 2015.

By comparison, GoPro revenue is expected to fall 15% to $1.4 billion this year unless its new drone and flagship cameras can generate fresh sales growth. GoPro could find it tough to compete against DJI, which has a three-year head start in drones andrecently started opening brick-and-mortar flagship stores in Asia.

DJI's flagship store in Shenzhen, China. Source: DJI

Parrot, the second biggest player in the market, reported thatits drone sales rose 60% annually to 44.4 million euros ($49 million) last quarter. That growth, while impressive, still pales in comparison to DJI's billion dollar business.

Four big chipmakersAs the battle over the drone market heats up, investors should pay close attention to four key chipmakers -- Ambarella , NVIDIA , Intel , and Qualcomm .

DJI currently buys image processing chips from Ambarella, which also supplies SoCs for GoPro action cameras. Ambarella hopes that drone-based SoCs, which account for about 10% of its sales, will help it diversify away from the sluggish action camera market. However, mobile chip giant Qualcomm has been expanding into that market with its own offerings and a reference design called Snapdragon Flight. Recent rumors suggest thatQualcomm is trying to pull DJI and GoPro away from Ambarella.

Intel is offering its own drone designs, powered by its Atom chips and RealSense depth-sensing cameras, as a potential solution for autonomous flights. That expansion complements its push into the Internet of Thingsmarket, which connects wearables, appliances, vehicles, and other objects to the cloud.

An Intel-powered drone. Source: Intel

Meanwhile, NVIDIA is relying on the drone and connected car markets to boost sales of its Tegra processors, which were marginalized by Qualcomm in the mobile market. Last year, NVIDIA released theManifold, a Tegra K1-powered embedded Linux computer for DJI's high-end Matrice 100 drone. That move suggests that NVIDIA's Tegra processors could be installed in more onboard navigation systems in advanced drones.

Those numbers will probably changeThe drone market is still a fledgling one, so these four numbers will change as the market develops. More drones will likely be sold as new competitors enter the market, prices will fall, DJI's market value could keep rising, and one major chipmaker could push the others out of the market. Therefore, investors should keep a close eye on these figures with each passing quarter.

The article Drones in 2016: 4 Numbers Everyone Should Know originally appeared on Fool.com.

Leo Sun owns shares of Qualcomm. The Motley Fool owns shares of and recommends Ambarella, GoPro, and Qualcomm. The Motley Fool recommends Intel and Nvidia. 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.

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