The document discusses the evolving landscape of commercial unmanned aerial systems (UAS) in relation to military and government needs, focusing on aircraft acquisition trends, regulatory developments, and technological advancements. It highlights the importance of end-user requirements, the challenges of scaling commercial UAS, and the potential for integrating advanced imaging and data processing capabilities. The analysis covers various aspects, including cost assumptions, market opportunities, and the implications for different sectors such as agriculture, oil, and gas.

1. Evolving EO/IR Commercial UAS Landscape: User
Needs and DefenseTrends
For TTC’s Next-Generation ISR Symposium for Military and Government
Arlington,VA. December 15-16, 2016
Ron Stearns,
Director, Business Development, Robotics and Unmanned Systems

2. DoD Aircraft Acquisition through the FYDP
Aircraft by Service Branch, 2015-2021 Fixed and Rotary Wing, 2015-2021 Aircraft by Category, 2015-2021
Source: Velocity Group analysis of DoD FY 2017 budget
documents
With the inclusion of zero-hour rotary-wing programs (e.g. AH-64E, AH-1W to AH-1Z) and target drones (BQM-167,
QF-16) there will be 3,037 DoD aircraft deliveries from FY 2015-2021. Rotary-wing aircraft are the major FYDP
acquisition driver, owed in large part to operations tempo and airlift demand in United States Central Command

3. U.S.Air Force,Aircraft Acquisition 2015-2021
Source: Velocity Group analysis of DoD FY2017 budget documents

4. U.S.Army,Aircraft Acquisition 2015-2021
Source: Velocity Group analysis of DoD FY2017 budget documents

5. DoN,Aircraft Acquisition 2015-2021
Source: Velocity Group analysis of DoD FY2017 budget documents

6. DoD:Aircraft with a Baseline EO/IR Turreted Sensor
OH-58D: 368
AN/AAQ-11,
LMT
MX-15,
MX-20
L-3/
Wescam
MTS
Family
Raytheon
4,739 Aircraft as of calendar 2014
POP 300,
IAI
Alticam
AC-10,
Hoodtech

7. Unmanned Aerial Systems: Commercial Proving
Grounds, Airspace Access and Safety-Case
Development

8. Transitions,Time Compression, Part 107
May, 2014: FAA
accepts petitions for
commercial UAS
exemption under
Section 333 of FAA
Modernization and
Reform Act of 2012
First six Section 333
exemptions are issued
on Sept. 25, 2014 to six
television and film
companies.
5,309 Section 333s
approved as of June
8,2016).
Blanket exemptions for
test sites and 333 in
increasing effect. AGL
from 400-800 feet
Moves toward Risk-
based certification.
Night operations under
Section 333.
Expedited, online
commercial
registration. Part 107
released June 21, 2016
From inertia to normalized access in two years
From thousands of commercial
UAVs to potentially millions –
how can systems scale to
accommodate?
• Regulatory
• Production
• Certified equipage
• Information flow
• Command and control
• Operator certifications
• Commercial service providers
• Human-machine interface
• Airworthiness

9. FAA Part 107: Early Takeaways
BVLOS will
usher in
viable
commercial
Group 3 UAS
“Progress in science is
not linear, but rather
exhibits periods of
peaceful interludes
punctuated by
intellectually violent
revolutions.”
-Thomas Kuhn
(paraphrased from “The
Structure of Scientific
Revolutions”, 1962).
Gold Rush, but
who are the
early winners?
Imagery, data and
business analytics
driving CONOPS
and revenues
Commercial UAV
size, weight and
reliability must
evolve
Small businesses,
Hyper localized
> $1mm in
revenues
Greater: altitude,
controller radius,
operations over
people
Increasing:
mapping use,
data reselling,
applicability
Section 333 and
Part 107 are
building the
safety case

10. Risk Classes and Commercial Best Fit
• VTOL UAV capabilities in the
40-80 lb. range are surpassed
every 18-24 months.
• Service providers are
purchasing UAVs in twos to
avoid fleet obsolescence
• UAVs less than 40 lbs. will
increasingly become a
commoditized design space
• Sensors have not met UAVs on
an equal field – Form Factors,
SWaP and costs slowly
coming into agreement
• Commercial-grade UAV
production is not yet ready to
scale manufacturing
Risk Class Aircraft Weight Example Aircraft NAS Access
RC -6 15,000 lbs. and up 2020+
RC-5 5,000-15,000 lbs. 2020+
RC-4 1,500-5,000 lbs. 2020+
RC-3 55-1,500 lbs.
2019-2020
Exemptions
RC-2 6-55 lbs. Part 107
RC-1 1-6 lbs. Part 107

11. Commercial UAS Ecosystem Snapshot
Analyzed 647 organizations with active pursuit and/or
participation in UAS markets and assigned to categories
based upon stated core competency
Data Processing: video, imagery and analysis
RF/Comms: wireless, nav., detection, antennas, satcomms
EO/IR: manufacture of all modalities
Services: insurance, training, measurement, legal, field
support, engineering, test, consultants
Embedded Products: GPS, PCB, computers, data storage
Electronics: MEMS, cabling, circuits, solar, avionics, IMU,
switches, converters, connectors, motion control
Components: bearings, power, batteries, fasteners, servos,
hydraulics, tooling, chutes, cases, ground support

12. Market Gap – Commercial Opportunity
Canon DSLR = 3-4
lbs. $2000 for body,
lens, gantry
assembly
Humidity, salinity,
particulates are no-
fly deal breakers
Current small camera
mounting, approx.
$1300
Weight wreaks havoc on small UAS
capabilities. A 5-gram weight can
equal 15-minutes of flight time on
a 40-lb, fixed-wing UAV with 20-
hour endurance
Performance penalties are worse
for VTOL UAVs. With maximum
endurance of roughly 30 minutes
Desired Commercial EO/IR Sensor Properties:
1. ITAR Free – completely commercially-
available, worldwide
2. Dynamically Stabilized
3. Environmentally robust: day-night and
weather-tolerant (to be determined)
4. Independently powered, discreet – not tied
to or pulling from UAV power
5. Less than 1.5 lbs. for entire on-board
system
6. Much lower power draw
7. Store onboard or stream imagery
8. Modular, hot-swappable payload(s)
9. 3-4” diameter gimbal
10. Price Point closer to $4,000 per unit.

13. Current Systems and Costs
DJI Inspire T600 with thermal imager
$12,000
The Xenmuse (DJI) thermal camera
(FLIR) retails as a standalone for $6,900
FLIRview Pro SUAS starts at
$2,000 Size: 2.48" × 1.75" x
1.75“ Weight: 3.25-4 oz
AeroVironment’s i23 gimbal
on DoD’s RQ-11B Raven starts
at $30,000
CloudCap (UTC Aerospace
Systems) TASE 150
Aftermarket for $8000
1.98 lbs – 4.5” diameter
ITAR Restricted
M1-D PTZ UAV Infrared
Camera
List price: $9,995
4.5” diameter
> 2 lbs.

14. UAV Cost Assumptions - Total Market
• Cost assumptions for
commercially-dedicated
Risk Class 2-4 UAVs are
derived from
representative list pricing
• Price erosion will come in
the Risk Class-2 VTOL
market, where barriers to
design and manufacture
are low, and new
technologies are spiraled
about every 24 months
Risk Class 2 –
Representative 12-bladed
VTOL intended for
industrial imaging. $50,000
and up
20-lb. payload
10 minutes flight time
Risk Class 3 – Yamaha’s
R-Max purely commercial
imaging derivative
200 lb. MTOW
$170,000/copy
Risk Class 4 – Aurora Flight
Sciences Centaur OPV
Based on DA-42 GA Aircraft
- $600,000 new, add
$250,000 for OPV
conversion. 3,945 lb.
MTOW
These represent the best commercial price/performance/cost ratios

15. Imagery and Data Capture, Process & Delivery:
Developing Drone Layer
Electrical Government Oil & Gas AgricultureForestry
VAR VAR VAR VAR
Woolpert, OH Sewall, ME Merrick, CO Terra RS, WA
Aerial
Imagery
Aerial
Imagery
Aerial
Imagery
Aerial
Imagery
Drone Imagery Drone Imagery Drone Imagery Drone Imagery
Wholly-owned fleets, light twins, single
heavies, exquisite sensors
Will providers choose to own or lease drone
fleets as projects dictate? Ownership
introduces elements of variable costs and
unpredictability
Specialized value-added resellers incorporate
and layer metadata over imagery
Established imagery and information users
comprise a roughly $4 billion annual U.S. data
market
9x9” imager in C182 Aeryon’s Sky Ranger
Commercial Drones can flatten this information flow, with lower investment and technical
barriers to aircraft ownership and data capture, but not processing and delivery. Mapping and
surveying will remain specialized skill sets.

16. Commercial Markets: Data Needs
Aggregate needs, determine asset utilization, preposition assets for rapid response

17. Major Electrical Transmission Infrastructure
Corridors stretch for up to 800 miles. There
are programmed collections for vegetation
encroachment, subsidence and clearances.
In some cases these datasets must be
collected twice annually.
There are emergency needs during
brownouts or weather-related damage to
the distribution infrastructure. An ISO can
lose millions in days if it cannot locate and
repair. The added costs come from having to
purchase power from outside networks.
Even with a crewed Helicopter and an
observer dedicated and on call 24/7 there’s
no guarantee they’ll be able to fly. A UAV
could do the dangerous work in remote
areas to isolate unexpected outages,
damage and/or hot spots.

18. Oil and Gas: Major Transmission
Infrastructure Density
Map of major natural gas and oil
pipelines in the U.S.
Hazardous liquid lines are in red,
gas transmission lines in blue
Concentration in Texas, Oklahoma
and Gulf states will help to define
UAS CONOPS as well as industry
and political partnerships
This represents a sophisticated,
moneyed end-user set. UAS
Requirements are understood and
waiting for expanded BLoS airspace
access
Source: Pipeline and Hazardous
Materials Safety Administration

19. Commercial UASValue Proposition
Fixed fleet operating costs, data
driven maintenance and upgrades
Improving existing designs for
performance, SWaP, and human factors
Take new concepts from design to
manufacture under one roof
Keep fleet updated with
latest technology
Let you focus on selling
your service or platform

20. The Velocity Group is at the leading edge of onshore product development and
rapid time-to-market. We are assembling a world-class portfolio of design and
manufacturing organizations that put customer focus at the heart of everything
we do.
Our mission:
We help our clients accelerate time from idea to profit by providing single-source
accountability for and management of the entire range of resources needed to
bring concepts to profitable, market-ready products, to scale up for manufacturing
and to produce and sustain them efficiently and cost-effectively.
www.velocityfast.com info@velocityfast.com ron.stearns@velocityfast.com
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