Image source: General Atomics.
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As the use of drones expands and regulations from the FAA become clearer, it's time for investors to consider how drones will be used and what companies can benefit from their use. One big opportunity is in security. Everything from a bank to national security can benefit from drone usage, saving cost and making the world safer.
A recent report from PwC calledClarity from above: PvC global report on the commercial applications of drone technologylaid out where we could see drones in the security sector, and what the opportunity might be for investors. And the numbers might surprise you.
Security applications far and wide
PwC's report highlights the advantage drones have in providing advanced electronics, sensors, and videos to tasks that are primarily done by humans today. For example, checking for the breach of a security fence or border is probably better and more efficiently done by a drone with video and an infrared camera than a security guard.
Drones can also cover a much wider area in a short amount of time than a human, although for a limited amount of time. Consider a drone doing a perimeter check around a secure facility or gauging where first responders need to be in the case of a disaster.
Where technology in the security space could be really important is in recognition of a threat. Machine learning software could mean drones can identify who an intruder is and follow the thermal image until backup personnel can arrive.
Big companies are already selling security drones
The security space is already an early mover in drones, with General Dynamics (NYSE: GD), Kratos Defense & Security Solutions (NASDAQ: KTOS), and Lockheed Martin (NYSE: LMT) having security drones in the air (Predator) or in development. Boeing (NYSE: BA) acquired Insitu in 2008 to expand its drone capabilities and was one of the first to test commercial drone flight in the U.S. As a leader in aerospace, Boeing is a company to keep an eye on in all segments of the drone market.
The Qube drone is designed for use by first responders. Image source: Aerovironment.
Most of the companies I've mentioned are looking at national security drones, but they're starting to move downstream as well. I mentioned Boeing's commercial drones, and Lockheed has outlined plans to target the civil and commercial markets as well. You may not be flying a drone from any of these companies anytime soon, but they may have a bigger presence in security than household drone names like DJI.
On a smaller scale, Aerovironment (NASDAQ: AVAV) is the biggest supplier of small military drones, and it's bringing that technology to security with products like Qube and Shrike VTOL. Qube is designed for law enforcement and first responders, making it a quick tool to deploy to provide more information to an operator and lower risks to those responders.
Where drones don't measure up...yet
While drones are a big potential market for security, it's not a great fit in every way. Drones usually have fairly short battery lives, meaning they're not a 24/7 security solution. Wired products are being developed, but that limits range.
Technology and regulations haven't yet created the space for automated drone security solution, either, meaning an operator would have to fly a drone and relay data to those on the ground. That negates potential labor savings in security and limits the opportunity.
While solutions and regulations to make drones more commonplace aren't built yet, the potential for the market is undeniable.
A massive market opportunity
PwC puts the potential for the security market alone at $10.5 billion annually, a huge potential for all drone companies. What will be key to unlocking that market is regulators creating a framework of rules for drone operators to follow, and drone companies expanding their product and technology offerings to serve customers looking for security drones.
Drones could help solve a lot of security challenges and reduce the labor needed to monitor sites around the world. And with a $10.5 billion market potential, this is a business investors shouldn't underestimate as drone development improves.
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Travis Hoium owns shares of AeroVironment. The Motley Fool recommends AeroVironment. 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.