DJI was founded in 2006 by Chinese national Frank Wang Tao while studying at the Hong Kong University of Science & Technology. A decade later, most financial analysts estimate DJI’s market value to be worth $10 billion or more. The Shenzhen-based drone manufacturer is now the world’s leader in the hobbyist and commercial drone market, capturing 70-80 percent of the sales in this category. The competition has been mostly eliminated by DJI’s aggressive price war and technological advancements. The few western corporations facing DJI such as California-based 3DR and GoPro, or the French electronic maker Parrot, are now in serious financial trouble after repeated commercial failures against the market leader. All these companies have recently announced important layoffs, up to a third of its staff for Parrot. Even DJI’s Chinese competitors fare no better. Yuneec, which received a $60 million investment from Intel in 2015, is also cutting staff. Same for Autel. Others such as Walkera, Ehang, or Xiaomi are fighting for the leftovers.
3DR is now recycling its unsold Solo Drone inventory to professionals for mapping services. Meanwhile, the future of GoPro as a drone manufacturer is unknown since the failure of its Karma drone last years.
How did they get here? First, the drone market is extremely competitive and the technology plays a huge role in market dominance. Designing a drone that flies is easy. Designing a drone that flies well is harder, as GoPro learned last year after the Karma battery disaster that forced the company to launch a massive product recall and freeze the sales of its drone for several months. Making a good drone at competitive prices represents another challenge. The Solo drone made by 3DR was positioned directly against the DJI Phantom but the U.S.-based company never managed to match DJI’s price and features, thus condemning the Solo from the beginning.
What is the connection to the Phantom 5? The answer is simple: the amount of innovation and features will depend of DJI’s marketing and commercial strategy. If the folks behind the Chinese company think that they need to keep the competitors under pressure, they may continue to propose ambitious new products. However, releasing new products at an extremely fast pace with a massive amount of innovation costs a lot of money. For instance, the Phantom 4 Pro was announced only 10 months after the introduction of the previous Phantom 4. Each short lived version must break even over a short period of time. However, if DJI’s CEO thinks that he already dominates the market, he may decide to slow down the development cycle. Perhaps, it is what Wang meant when he said;
“DJI now has over 11,000 staff worldwide, with offices in 17 cities around the world. As we continue to expand our global footprint, we need to strengthen our management in the area of operations. The move will also enable us to gain a deeper understanding of our growing customer base and build stronger relationships with our dealers and partners.”