Market Opportunity For AUVSIs Xponential Dallas, TX. May 11th, 2017 - PowerPoint PPT Presentation

Commercial UAS: Access, Ecosystem and Market Opportunity For AUVSI’s Xponential Dallas, TX. May 11th, 2017 Ron Stearns, Director, Business Development, Robotics and Unmanned Systems

Transitions, Time Compression, Part 107 From thousands of commercial UAVs to potentially millions – how can systems scale to accommodate? • Moves toward Risk- Regulatory 5,309 Section 333s May, 2014: FAA based certification. approved as of June accepts petitions for First six Section 333 • Production Night operations under 8,2016). commercial UAS exemptions are issued Section 333. • Equipage exemption under on Sept. 25, 2014 to six Blanket exemptions for Expedited, online Section 333 of FAA television and film • test sites and 333 in Information flow commercial Modernization and companies. increasing effect. AGL registration. Part 107 • Command and control Reform Act of 2012 from 400-800 feet released June 21, 2016 • Operator certifications • Commercial service providers From inertia to normalized access in two years • Human-machine interface • Airworthiness

Risk Classes and Commercial Best Fit • VTOL UAV capabilities in the 40- Risk Class Aircraft Weight Example Aircraft NAS Access 60 lb. range are surpassed every 18-24 months. RC -6 15,000 lbs. and up 2020+ • Service providers are purchasing UAVs in twos to avoid fleet RC-5 5,000-15,000 lbs. 2020+ obsolescence • VTOL UAVs > 40 lbs. will RC-4 1,500-5,000 lbs. 2020+ become a commoditized design space 2019-2020 • Barriers to entry for RC 1-2 RC-3 55-1,500 lbs. Exemptions rotary-wing platforms are few, but the ability to scale production and spiral in capabilities is unproven RC-2 6-55 lbs. Part 107 • To do so will require a warm line, thorough IP sharing, real-time RC-1 1-6 lbs. Part 107 field feedback

Part 107: Early Takeaways “Progress in science is not linear, but rather exhibits periods of peaceful interludes BVLOS will punctuated by Gold Rush, but Imagery, data and Commercial UAV usher in intellectually violent who are the business analytics size, weight and viable revolutions.” early winners? driving CONOPS reliability must commercial and revenues evolve Group 3 UAS -Thomas Kuhn Increasing: Small businesses, Greater: altitude, Section 333 and mapping use, Hyper localized controller radius, Part 107 are data reselling, > $1mm in operations over building the applicability revenues people safety case (paraphrased from “The Structure of Scientific Revolutions”, 1962).

Drone Advisory Committee: Paths Forward Developments of note from the DAC’s Jan. 31, 2017 meeting in Reno, NV “This Federal Advisory committee was formed to provide an open venue for the FAA and key decision -makers supporting the safe introduction of UAS into the NAS. Members on the Committee work in partnership with the FAA to identify and propose actions to the FAA on how best to facilitate the resolution of issues affecting the efficiency and safety of integrating UAS into the NAS.” 700,000 Registrants in year one of the FAA’s Online Drone DAC commercially-important activity: Registry • Operations over people not commercially 42,000 FAA Drone Registrants registered as commercial involved and BLOS ops. (e.g. Pathfinder) users • Changes to the waiver process in work, to 35,000 Applicants for the Part 107 Pilot Knowledge enable access beyond Part 107 Exam • Subcommittees working to establish minimum 17,000 Have passed the Part 107 Pilot Knowledge Exam aircraft equipage, moving away from consumer derivatives to commercial-grade UAS • Number of remote pilots in U.S. with Needs for aggregated commercial safety data 29,000 6,000 exist to build the commercial UAS safety case in process • Subcommittees want to look beyond smalls, and scale these corollaries to larger UAVs

Commercial UAS Ecosystem Snapshot Analyzed 647 organizations with active pursuit/participation in UAS markets and assigned to categories based upon stated core competency Data Processing: video, imagery and analysis RF/Comms: wireless, nav., detection, antennas, satcomms EO/IR: manufacture of all modalities Services: insurance, training, measurement, legal, field support, engineering, test, consultants Embedded Products: GPS, PCB, computers, data storage Electronics: MEMS, cabling, circuits, solar, avionics, IMU, switches, converters, connectors, motion control Components: bearings, power, batteries, fasteners, servos, hydraulics, tooling, chutes, cases, ground support

Present Conditions and The Way Ahead Investment and 10s of Millions $: 3DR, Parrot, GoPro, Yuneec Kespry, Measure, Precision Hawk Events Drone as a Service (DaaS) Consumer to Drone Life: 50 Hours 100 Hours 300 Hours 1000 Hours + Commercial Product/Market Very Small Companies Limited Industrial Use Proof of Commercial Concepts Maturity Section 333 Part 107 Part 107 Waivers Market Focus Hardware Software (Daas)Service 2014 2015 2016 2017 2018

Evolving Participants, Business Models • Measure – Drone as a Service – new funding wave from VC and Private Equity • Trumbull Unmanned – Oil & Gas, Drone-Enabled services provider • Price Waterhouse Coopers – advisor to industrial users, conduit to drone use • AeroVironment – Commercial Agriculture Service with internally-developed drone • Trimble Geospatial – Took UX-5 UAV in house, Service for Precision Ag. • Intel – Processing power, autonomous operations • Altavian – Deployed services teams, mapping intensive • Qualcomm - Cellular connectivity to enable autonomy • AECOM – Industrial advisors and project management Evolving Models Truly Disruptive • Airbus Ventures – Vahana, an autonomous personal-transportation vehicle • Project Wing – Autonomous delivery via drone • Amazon Prime Air – Delivery, consumer goods • Uber – Aggressive build, test and flight plans for a VTOL Uber model

Market Gap – Commercial Opportunity Canon DSLR = 3-4 lbs. $2000 for body, Desired Commercial EO/IR Sensor Properties: lens, gantry assembly 1. ITAR Free – commercially-available, worldwide Humidity, salinity, 2. Stabilized particulates are no- 3. Environmentally robust: day-night and fly deal breakers weather-tolerant 4. Independently powered Weight wreaks havoc on small UAS 5. Less than 1.5 lbs. for entire system capabilities. 6. Much lower power draw 7. Store onboard or stream imagery >10 grams can equal tens of 8. Modular, hot-swappable payload(s) minutes of flight time on a Risk 9. > 5-inch diameter gimbal Class 2 fixed-wing UAV Current small camera mounting, approx. Performance penalties are worse $1300 for VTOL UAVs. With maximum endurance of roughly 30 minutes

Imagery and Data Capture, Process & Delivery: Developing Drone Layer Commercial Drones can flatten this information flow, with lower investment and technical barriers to aircraft ownership and data capture, but not processing and delivery. Mapping and surveying will remain specialized skill sets. 9x9” imager in C182 Aeryon’s Sky Ranger Woolpert, OH Sewall, ME Merrick, CO Terra RS, WA Wholly-owned fleets, light twins, single heavies, exquisite sensors Aerial Aerial Aerial Aerial Imagery Imagery Will providers choose to own or lease drone Imagery Imagery fleets as projects dictate? Ownership introduces elements of variable costs and unpredictability Drone Imagery Drone Imagery Drone Imagery Drone Imagery Specialized value-added resellers incorporate and layer metadata over imagery VAR VAR VAR VAR Established imagery and information users comprise a roughly $4 billion annual U.S. data Electrical Forestry Government Oil & Gas Agriculture market

Major Electrical Transmission Infrastructure Corridors stretch for up to 800 miles. There are programmed collections for vegetation encroachment, subsidence and clearances. In some cases these datasets must be collected twice annually. There are emergency needs during brownouts or weather-related damage to the distribution infrastructure. An ISO can lose millions in days if it cannot locate and repair. The added costs come from having to purchase power from outside networks. Even with a crewed Helicopter and an observer dedicated and on call 24/7 there’s no guarantee they’ll be able to fly. A UAV could do the dangerous work in remote areas to isolate unexpected outages, damage and/or hot spots.

Oil and Gas: Transmission Infrastructure Density Map of major natural gas and oil pipelines in the U.S. Hazardous liquid lines are in red, gas transmission lines in blue Concentration in Texas, Oklahoma and Gulf states will help to define UAS CONOPS as well as industry and political partnerships This represents a sophisticated, moneyed end-user set. UAS Requirements are understood and waiting for expanded BLoS airspace access Source: Pipeline and Hazardous Materials Safety Administration

Critical Electricity-Generation Infrastructure, United States (2017) Opportunity for commercial UAV/UGV- 50 500 2000 5000 enabled site surveillance and survey, with emphasis on Natural Gas, Coal and MW Nuclear plants which together generate 84% of U.S. output. Counter UAS will also be a part of this mission set. U.S. Electricity Generation By Type, 2017 Type Number of Plants % National Output Natural Gas 1,793 34 Coal 400 30 Nuclear 61 20 Hydroelectric 1,444 7 Wind 999 6 Solar 1,721 1 Oil 1,076 1 Source: Washington Post