Tuesday, September 27, 2016



It is a big sky, but GoPro’s new place in the drone market is already getting crowded.
Sales of high-definition camera drones are soaring. Most are a pain to lug around, though. So GoPro’s first drone, unveiled last week, attempted to set itself apart with collapsible wings that allow the quadcopter to fit into a backpack-size case. The Karma drone, as it is called, goes on sale next month.
It was a solid first attempt by the company better known for its tiny action cameras. But GoPro was never destined to have this airspace to itself. SZ DJI Technology showed off its own foldable drone on Tuesday. The Mavic Pro reduces to a size even smaller than GoPro’s Karma and includes many of the obstacle-dodging and autopilot features that made the company’s Phantom 4 a hit. DJI’s new drone also goes on sale next month.
The news caused GoPro’s shares to slip on Tuesday. DJI already accounts for about half the U.S. drone market, according to Skylogic Research. Other estimates have put the company’s share at more than two-thirds globally. The privately backed company, based in Shenzhen, China, has raised about $581 million in funding to date for a valuation of about $10 billion, according to Dow Jones VentureSource. That is over four times as large as GoPro’s market capitalization.
Competing with such a formidable opponent is risky. But GoPro’s drone is likely to serve more as an expansion product to its existing camera market, as the Karma requires one of the company’s Hero 4 or Hero 5 cameras to operate. That should limit the competitive overlap with DJI.
Drones also aren’t expected to be a major contributor to GoPro’s business in the near term. The company told analysts last week that the Karma will be available only through select retailers initially. GoPro has also priced its drone competitively, including a stabilizing “grip” stick and carrying case with the device. So margins on the drone will likely be modest, at least to start. The new Hero 5 cameras are far more important to the company’s financial outlook.
The drone market is also still in its early days, with lots of room for competition. Consumer-drone sales totaled about $1.6 billion last year, according to Gartner. Simona Jankowski of Goldman Sachs Group projects consumer-drone sales alone will surpass the $3 billion mark by 2019. That leaves plenty of airspace for GoPro, even if it hits some turbulence on the way.
Write to Dan Gallagher at dan.gallagher@wsj.com

1 comment:

  1. It is very interesting for me to see how businesses are taking military developed technology. The market for acquiring and utilizing drones in business maybe in its early years as you mention, but we (Military) have used drones over the past 10 years to deliver supplies and conduct surveillance. They are very beneficial when it comes to observing and capturing astonishing footage and pictures. I Would really like to see more marketing commercially, socially, and digitally, of the essence of their specific product.

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