For China’s high-flying drone maker, the sky’s the limit

Aug 09, 2017

The world's leading civilian drone company is getting a new pilot—or at least a new co-pilot, anyway.

Da-Jiang Innovations (DJI), the Shenzhen, China-based manufacturer of the popular Phantom and Mavic aerial drones, announced Wednesday that veteran electronics industry executive Roger Luo has been appointed president and will assume day-to-day operational responsibilities from founder Frank Wang.

Wang, the model plane enthusiast who founded DJI in his Hong Kong dorm room in 2006, will remain CEO and is (by far) the company's largest shareholder. He will continue to oversee DJI product development. Senior executives at DJI say Luo's promotion reflects Wang's desire to get back to the lab to refine and expand the technologies that helped to make DJI the world's biggest drone maker in the first place.

"DJI now has over 11,000 staff worldwide, with offices in 17 cities around the world," Wang said in a statement announcing Luo's appointment. "As we continue to expand our global footprint, we need to strengthen our management in the area of operations."

DJI's Phantom quadcopters, released in 2013, were an instant hit among hobbyists and professional photographers, and essentially created the consumer drone industry. The company's premium Inspire model, which weights nearly 7 pounds and costs upwards of $3,000, remains the drone of choice among hard-core aerial photography enthusiasts.

But DJI tapped a far larger market last November with the introduction the Mavic Pro, a compact drone weighing less than 2 pounds but offering 4K video resolution, flight times of up to 27 minutes and a control range of up to 7 kilometers—all for less than $1,000.

The company doesn't release sales data but Luo says that, within three days after releasing the Mavic, DJI had received three times more orders for the model than it had expected to sell the entire month. DJI vanquished a crowded field of well-funded U.S. and European competitors, including San Mateo, California-based GoPro, who were unable to deliver on promises to roll out comparable drones.

In May, DJI released the Spark, a drone that doesn't fly as far or as fast as the Mavic, offers video resolution that isn't quite as sharp, and uses smaller batteries that allow hang times of only 15 minutes. But the Spark is as small as a soda can, costs only about $500 and can be controlled with simple hand gestures. Sales for the Spark, too, are soaring well beyond DJI's expectations.

Luo declines to discuss specifics of DJI's next product release. But he makes clear that DJI's strategy will involve lower-prices and higher sales volumes. "Even the Spark's price is not so friendly for consumers," he said. "We want to have products with friendlier prices that still offer the same great technology so that our technology can be enjoyed by more people."

To deliver on that strategy, DJI will need to ramp up operations fast. Luo, who earned engineering degrees from National Taiwan University and University of California, Santa Clara, and has held senior engineering, operations and product management roles at Apple, Siemens, BenQ and Foxconn, seems ideally suited to the task.

Luo joined DJI in 2015 from Foxconn, the gaint Taiwanese company that is the primary supplier for Apple's iPhones. The business unit Luo oversaw at Foxconn employed more than 25,000 people. When he moved to DJI, the drone maker's operations division employed just 2,200 people. But Luo says the operational challenges at DJI are far greater than those he faced at Foxconn. DJI is growing faster than Foxconn, and its product cycles are much shorter—three to six months at DJI, compared to about a year at Foxconn. The technology for drones is more complicated than that of phones, and predicting demand for new products can be anybody's guess.

DJI is betting that if they can push the price below the $500 mark, the market for consumer drones isn't anywhere close to saturation.

Gartner says global drone sales will rise to 3 million this year, with market revenue growing to $6 billion, a 34% increase over 2016. Skylogic Research estimated recently that DJI was by far the market leader for drones in the $500 to $1000 price rather, with a 36% of the market. The number two spot was held by 3D Robotics, with 19 percent share. But that company, led by former Wired editor Chris Anderson, has abandoned its drone-making ambitions after burning through almost $100 billion in venture capital funding.

"What we realized is that it's just going to be inherently much more difficult for a Silicon Valley-based, software-focused company to compete against a vertically integrated powerhouse manufacturing company in China," Colin Guinn, 3D Robotics former chief revenue officer told Forbes last October.

Earlier this month, 3D Robotics announced that it would integrate its Site Scan software platform with DJI to make it compatible with their drones to convert images into data. 3DR also announced the launch of a new data platform for drones used by businesses, an area where DJI sees enormous opportunity for growth.

It's not hard to see why DJI would have its eye on the enterprise drone segment. Gartner estimates that currently personal drones account for more than 90 percent of the market in unit sales but represent only 40 percent of the market's revenue. Luo says DJI has only begun to identify the ways in which drones can be used in sectors such as real state, mining, search and rescue and equipment maintenance and repair.

In February, DJI unveiled its Matrice 200 series of drones which are specifically designed for inspecting bridges, electrical towers and other hard-to-access structures. Luo argued that one of the most promising areas for enterprise drone use would be in agriculture, where many people die each year spraying pesticides that could be more safely dispersed by aerial drones.

Wang, famed for his love of tinkering and aversion to the spotlight, will oversee development of those and other growth opportunities, say colleagues. Over the weekend the 36 year-old founder, sporting his trademark goatee and golf beret, made a rare public appearance at the Shenzhen Bay Stadium to preside over "Robomaster," DJI's annual contest for college engineers. The competition pits student teams from more than 200 universities in combat against each other using robots and drones they build and program themselves. Amid a hail of bright floodlights and confetti, Wang, flanked by leaders of the Shenzhen city government, presented a giant check for 200,000 renminbi (about $30,000) to the winning team, a group from South China University of Technology University from Guangzhou. As the cameras closed in and victors posed jubilantly for press, Wang flashed a half smile, and quietly slipped away.

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