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Airware for Drones

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These slides use concepts from my (Jeff Funk) course entitled Biz Models for Hi-Tech Products to analyze the business model for Airware, a provider of operating systems for drones. Developing applications for drones involves high development costs and these costs can be reduced through the use of a well-designed operating system that is used in many types of drones. Just as Android, iOS, and Windows have reduced the development costs for application software in smart phones and personal computers, Airware’s operating system, or aerial information platform as they call it, can reduce the cost of implementing drones for agriculture, delivery, movie production, security, and the many other applications that have been proposed. Airware is trying to develop an eco-system of drone manufacturers, application developers, sensor manufacturers, and drone operators, each of which contributes towards low cost and high performance applications for drones. These slides describe the value proposition, customers, method of value capture, scope of activities and the method of strategic control for Airware.

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Airware for Drones

  1. 1. MT4002 Group Project Arun Kumar  Koen Van Vlijmen  Raghunath Pradeep  Yuli Samantha
  2. 2. Introduction to Drones & Airware1 Value Proposition2 Comparison with Competitor3 Customers & Markets4 Value Capture5 Strategic Control6 Issues & Improvements7
  3. 3. Introduction to Drones & Airware1 Value Proposition2 Comparison with Competitor3 Customers & Markets4 Value Capture5 Strategic Control6 Issues & Improvements7
  4. 4. INTRODUCTION • Unmanned Aerial Vehicles (UAVs) – Controlled by ‘pilot’ on the ground OR autonomously via software • Light weight and mobility permit various applications Drones  Airware General Atomics MQ- 1 Predator firing a missile Negative connotation common Military, Data collection, Agriculture & wildlife Recreation, Commercial use
  5. 5. INTRODUCTION 2014: 15.22 Million 2020: 1.27 Billion 2035: 5 Billion Annual Commercial Drone Market Size (USD) In 2035, UAV ops > Manned Aircraft ops Drones  Airware
  6. 6. Drones  Airware Founded in San Francisco in 2010 Raised over 40 Million USD in investments Making drones more accessible for commercial use by providing novel operating system for drones INTRODUCTION
  7. 7. Aerial Information Platform (OS) a) Flight Core b) Ground Control Station Software c) Configuration Manager d) Airware Cloud Main Product
  8. 8. INTRODUCTION Examples of uses Insurance inspection Damage assessment Environmental monitoring S&R Land management Public Safety Survey Mapping Drones  Airware Range of Industries
  9. 9. Introduction to Drones & Airware1 Value Proposition2 Comparison with Competitors3 Customers & Markets4 Value Capture5 Strategic Control6 Issues & Improvements7
  10. 10. Ecosystem Drones Application Software Components & Peripherals Enable an ECOSYSTEM
  11. 11. • Vertical disintegration between drone manufacturers, OS developers, application software developers, and component manufacturers • Different capabilities are required along the value chain, hence Airware focuses on developing the brain SCOPE OF ACTIVITIES
  12. 12. Value Proposition Aerial Information Platform Drone manufacturer Lower development and integration cost for customized drones, solve interoperability problem, address safety/Regulatory issuesApp developer Single common platform, integrate aerial data into app Component developer Lower development cost, solve compatibility issue Development of Windows Vista 10000 employees x $200000/year/employee x 5 years --------------------- $10 Billion
  13. 13. Value Proposition Aerial Information Platform Drone manufacturer Lower development and integration cost for customized drones, solve interoperability problem, address safety/Regulatory issuesApp developer Single common platform, integrate aerial data into app Component developer Lower development cost, solve compatibility issue Enterprises •Safe, reliable and flexible OS •Inexpensive system •Quick tailoring of drones •Compatible with fleets of different UAVs •Integrate aerial data into existing business systems •Common interface Government Safety assurance Drone leasing companies Wider range and lower cost of applications
  14. 14. Introduction to Drones & Airware1 Value Proposition2 Comparison with Competitor3 Customers & Markets4 Value Capture5 Strategic Control6 Issues & Improvements7
  15. 15. Competitor Independent, open-source, open- hardware project aiming at providing autopilot system Autopilot Software NuttX real-time operating system Autopilot Hardware PIXHAWK PX4 Autopilot  Strategy Canvas  User Comparison
  16. 16. High Low Security Standardization VarietyPrice Aerial Information Platform PX4 Autopilot PX4 Autopilot  Strategy Canvas  User Comparison Competitor SpecificityAPI Openness Installed base
  17. 17. Competitor Aerial Information Platform Aircrafts: Delta Drone, Altavian, Allied Drones and Drone America App Software: Pix4D, 2d3 Sensing, Sightline Components: Mica Sense, Phase One, Trillium, GE, Amimon, Swift, Sagetech, Alta Devices PX4 Autopilot PixHawk: Available from: 3D Robotics Store, Unmanned Tech, BYOD, UAV store, onDrone UK App Software: Open source Peripherals: 3D Robotics VS PX4 Autopilot  Strategy Canvas  User Comparison
  18. 18. Introduction to Drones & Airware1 Value Proposition2 Comparison with Competitors3 Customers & Markets4 Value Capture5 Strategic Control6 Issues & Improvements7
  19. 19. Customer Selection Enterprises and consumer use (Final Customers) App & Component developers Manufacturers
  20. 20. Enterprises  Drone Manufacturers  App & Component Developers CUSTOMER SELECTION
  21. 21. CUSTOMER SELECTION Dangerous repair work Major Needs Information gathering Inspection Safer work environment Trucks Current solutions Human resource Helicopters Satellites Enterprises  Drone Manufacturers  App & Component Developers
  22. 22. Enterprises  Drone Manufacturers  App & Component Developers Agriculture Industry CUSTOMER SELECTION • Inspecting the crop field • Collecting information for crop yield • Spraying pesticides Microsoft • Diverse user-base • High compatibility • User friendly interface
  23. 23. CUSTOMER SELECTION • Set Airware‘s integrated platform as an ingredient brand in order to raise assurance of authenticity and trust. • Build a powerful drone together. Intel: 1990s branding • Valuable feature in computers • Ingredient brand Enterprises  Drone Manufacturers  App & Component Developers
  24. 24. Similarities in valuation Specifications Software Customer review Enterprises  Drone Manufacturers  App & Component Developers CUSTOMER SELECTION
  25. 25. Enterprises  Drone Manufacturers  App & Component Developers CUSTOMER SELECTION • Provide a platform for third party developers for drone software and applications. Android and iPhone • 1.5 and 1.4 million Apps • Avenue for start-ups • Network effect
  26. 26. Enterprises  Drone Manufacturers  App & Component Developers CUSTOMER SELECTION PIXIEPATH • Connecting individual drones to the cloud. • Directing the activities of fleets of drone. FLYVER • Providing a platform to link with android ecosystem. • Link to open source app developers.
  27. 27. Introduction to Drones & Airware1 Value Proposition2 Comparison with Competitors3 Customers & Markets4 Value Capture5 Strategic Control6 Issues & Improvements7
  28. 28. VALUE CAPTURE Subscription 2500 USD/year for Aerial Information Program (AIP) Includes software, cloud services, app library, support Revenue model  Indirect Crowdsourcing Pros for Airware Pros for customers - Guaranteed revenue for subscription period - Provides time to build customer loyalty  higher avg customer lifetime value - Customers can generate revenue, to finance Airware subscription, by leveraging drones - More cost-effective for repeated usage - Forces Airware to continuously improve to cater to customer needs  better r/s Cons for Airware Cons for customers - Customers unsure of usage frequency may hesitate to subscribe - Possibility of vendor lock-in
  29. 29. Revenue model  Indirect Crowdsourcing • Aims to accelerate commercial drone innovation by funding relevant startups • Enables Airware to specialize in niche areas (value capture)  Enhanced value proposition through future acquisitions  Airware compatibility VALUE CAPTURE
  30. 30. Introduction to Drones & Airware1 Value Proposition2 Comparison with Competitors3 Customers & Markets4 Value Capture5 Strategic Control6 Issues & Improvements7
  31. 31. Establishment as Industry Standard Strategic Control Legal Protection
  32. 32. Industry standard  Legal protection • Current U.S. law requires case-by-case FAA authorization to fly a commercial drone • Establishment as industry standard with authority approval upon satisfying regulatory requirements can boost revenue sustainably • AIP could become default standard for drone OS to attain authorization STRATEGIC CONTROL
  33. 33. Industry standard  Legal protection Higher user confidence and security More extensive compatible 3rd party product development Indirect Network Effects STRATEGIC CONTROL • Household name in microprocessors • Provides guarantee of product quality/performance • “Airware Inside”?
  34. 34. Industry standard  Legal protectionSTRATEGIC CONTROL Public disclosure of invention required Liability of lawsuits & possible incurred costs Restrict competitors from gaining market share (AIP only integrated drone OS currently) Increase product credibility + - Patenting of key components of AIP source code
  35. 35. STRATEGIC CONTROL • Technologies being adopted faster than ever • Other companies likely to develop similar Drone OS (e.g. AIP) in near future • Patent protection advisable
  36. 36. Introduction to Drones & Airware1 Value Proposition2 Comparison with Competitors3 Customers & Markets4 Value Capture5 Strategic Control6 Issues & Improvements7
  37. 37. i. Government regulation ii. Security issues iii. Public skepticism and fear iv. Data security ISSUES
  38. 38. IMPROVEMENTS • Enhancements to value proposition: Introduction of safety feature into AIP to enable police to override user-directed flight of drone  Authorities more likely to approve AIP for enterprise usage  Reduced chance of drone-related accidents/crimes  Increased confidence in Airware-powered drones  Airware provides testing and licensing services for drone operators
  39. 39. IMPROVEMENTS One-time fee • Charge a fee for acquiring OS • Charge for every update released and installed Free OS • Stop charging customers for OS and updates • Earn revenue from developing drones and software Contract-based fee • Integrated service: customization, data management, etc. • Alternative methods of value capture:
  40. 40. IMPROVEMENTS One-time fee • Charge a fee for acquiring OS • Charge for every update released and installed Free OS • Stop charging customers for OS and updates • Earn revenue from developing drones and software Contract-based fee • Integrated service: customization, data management, etc. • Updates released to subscribers only to minimize piracy • Free trial  Data management likely to be highly profitable given IoT trend  Airware can provide enterprise solutions rather than just customized drones
  41. 41. IMPROVEMENTS • Alternative method of strategic control: • Develop applications in addition to OS • Data management and processing • Security system Data ownership for analytics (upon customer approval) Generate and sell optimized solutions Sell data as market research Enhanced capabilities due to IoT
  42. 42. SUMMARY Drones Application Software Components & Peripherals ECOSYSTEM Potentially a winner-takes-all industry i. Government regulation ii. Security issues iii. Public skepticism and fear iv. Data security
  43. 43. Q&A

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