MEASUREÂ andÂ Aerodyne, two of the biggest drone service companies according to theÂ 2019 Drone Industry Insights Report, have formed a strategic partnership in a new venture called Aerodyne Measure. In the agreement, Aerodyne obtained a 60% share of MEASUREâ€™s services division, with MEASURE maintaining a wholly-owned software division, which includes their comprehensive software platform,Â Ground Control. This is not only big news for the space but also a necessary and important shift toward consolidation that will enable long-term enterprise growth in the years to come.
As the drone industry matures, there is going to be someÂ natural settling of the marketÂ with some companies coming together in an attempt to gain strategic footholds in the industry and others that may leave the space. Although there is still growth in startup ventures, we seem to be witnessing a shift, as people begin to recognize that the industry is becoming saturated,Â if not oversaturated, with companies vying for a piece of the business.
This kind of oversaturation can beÂ detrimental to the industry as a whole. There is a danger in having too many choices, especially when there may not be a lot to differentiate between the options except for a willingness to outbid oneâ€™s competitors. This can drive prices lower and lower, negatively impacting the financial health of the industry as a whole. This has been the concern of Brandon Torres Declet, CEO of MEASURE, for the past 12-24 months.
â€śThereâ€™s too many ventured-backed businesses in the commercial drone industry who are all chasing the same number of customers in the United States,â€ť explained Declet when talking about the oversaturation in the market. â€śFor all intents and purposes, they are all doing the same thing. I think this is making it difficult for the customers to figure out what the right solution is. Itâ€™s having a detrimental effect on our ability to hold the line on price and actually generate a profit. Newly funded companies, thinking they have a cutting-edge solution, cut prices in half to attract business. Underpricing and a willingness to lose money on a job puts pressure on everyone else in the market to match those prices, or at least the solution set at that price point. So, you end up getting an artificial depression in what customers should be paying for the solution.â€ť
Declet sees strategic consolidation as a solution to avoiding this kind of underpricing. When there are fewer, more-established players in the marketplace, it translates to fewer bids per RFP. With fewer bids, the industry can establish a general cost for services that can drive profits and ensure scalability and growth. Through the creation of Aerodyne Measure, Declet is demonstrating what these kinds of partnerships can look like and the value they should provide.
â€śWeâ€™re going to be able to offer our customers new solutions,â€ť Declet explained. â€śWhether thatâ€™s a new way to inspect their infrastructure or a faster, easier way to obtain high-quality data for things like wind turbines or solar farm inspections, weâ€™re going to be providing even better solutions leveraging things like artificial intelligence. I think the biggest challenge here is ensuring that our customers understand the delineation between software and services, and that we are going to maintain the same level of high-quality service that they have had in the past, and that this is a good thing.â€ť
Ensuring that both companies are bringing value to a proposed merger is essential. For Aerodyne, that value included MEASUREâ€™s solid list of Fortune 500 customers and its proven ability to deliverÂ reliable high-quality data. For MEASURE, leveraging Aerodyneâ€™s operating presence in over 25 countries is clearly beneficial. These factors promise to enhance the offerings and features that they individually offered their customers, like being able to support businesses on a global scale, which was an especially important component for the North Americaâ€“based MEASURE.
â€śPeople should realize that this is now a global industry,â€ť Declet pointed out. â€śWe tend to be very US centric about drones, but I think people need to understand that most of the customers that everyone wants to work with have global interests and are operating in a lot of different countries. We need to start addressing those needs more holistically by thinking globally. Many of our existing clients are global in nature and the ability to marry up Aerodyne and MEASURE allows us to service those customers wherever they may be. This combination allows us to have a global presence.â€ť
With Aerodyne being awarded an additionalÂ $30 million in backing from their investors, it is now one of the most highly funded companies outside of the US apart from DJI. This puts them in an ideal position to financially support an effective global operation. With MEASUREâ€™s proven track record for high-quality data services, Aerodyne Measure is even more well-positioned to expand their global offerings.