Comment by seanmcdirmid
14 days ago
This isn't really true. Western drone companies haven't bothered competing in the consumer space, but they have made lots of advancement in the non-consumer space, where, arguably, the profits are better. Why try to compete with DJI for mail order drones going to kids when you can get a multi-million dollar contract with the Pentagon?
That didn't use to be true. There was once several Western consumer drone companies (3D Robotics, Parrot, GoPro, Intel, etc.) as recently as the mid-2010s. They gave up on the consumer space because DJI just totally ate their lunch, releasing better, cheaper drones year after year. I still remember how in any given year, the annual DJI drone releases would be smaller, cheaper, better, and fly longer than the other companies' drones (which were always a few years out of date) – AND they would have a whole range of consumer, prosumer, and professional drones and various kits and bundles for every market segment and price point. Nobody else could even remotely keep up.
Here's one Western article with some background: https://www.bloomberg.com/news/features/2020-03-26/dji-s-dro.... According to it, by 2020, DJI had 80% of the US consumer drone market. It discusses how DJI ruthlessly operated its business and crushed all of its competitors. Even a later startup, founded by Tesla engineers who wanted to build batteries right into the frame, didn't do so well and was soon acquired by another company.
It's not that nobody bothered TRYING to compete with DJI. Everyone tried, both in the West and in China itself (e.g. Yuneec, Autel), but DJI beat them all. Their founder is basically the Chinese version of Musk.
From that article:
> A rather confounding issue Impossible has faced is that the purchase bids put up by police and fire departments often have specifications that guarantee the sales will go to DJI. To illustrate, Gore pulls up a request for proposal for a drone from the Kansas Highway Patrol that lists properties such as flight time, cameras, and payload capacities. The numbers match up exactly with those of DJI’s Matrice 210. “If the U.S. wants to be competitive in robotics and drones, the least it can do to jump-start its own industrial base is to award government contracts to American companies or at least let them compete for them,” Gore says. “There are about 1,000 police departments receiving DHS grant dollars and spending them on Chinese-made, DJI-made drones. We are using our federal dollars to fund what could become one of China’s first prime contractors.” [...] “DJI has incredible lobbyists,” Gore says.
They competed until they were undercut, and then just didn't bother pursuing more profitable business instead. That is to say, if you can make a drone for $200, and DJI puts one out for $50, you don't really stand chance, so get out of the way and find more profitable businesses.
Anyways, DJI seems to just publish its revenue ($3.83b in 2021) but is it actually making money (profit, not revenue)? I'm not finding anything on Google. If they are selling each drone at a loss and just burning through VC still, that could be a huge problem.
> That is to say, if you can make a drone for $200, and DJI puts one out for $50, you don't really stand chance
The situation was more that western companies could make a drone for $1000, and DJI would make a significantly better drone for $500. Were they both $1000, the DJI drone would still clearly be better.
I am not praising DJI for free here. I just think that we need to face the truth. There is no way to improve with denial.
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Drones weren't just a commodity to be farmed out to the lowest bidder, though. DJI had significantly better technology in addition to being cheaper. They had better transmitters (with the standalone controllers), redundant sensors, obstacle detection and avoidance, camera sensors and lenses, FLIR, flight time, range, wind correction, gimbals, FPV headsets... all of it. Each year they'd come up with some major innovation and iterate on all the other parts, while their competitors would stagnate for several years at a time between new models (which couldn't compete even at release). In any given year, DJI always seemed to have the advantage. They did all of that ON TOP of being cheaper.
You don't get to do that by simply undercutting your competitors. No, DJI handily won the drone wars by being cheaper AND better and constantly improving. They simply outcompeted.
I think we have a tendency to look down on Chinese manufacturers as copycats, but DJI is an exception to that rule. Their founder Frank Wang was basically a young college engineer who bootstrapped the whole consumer drone industry, worked ruthlessly hard, and stayed way ahead of his competitors, becoming Asia's youngest billionaire. Forbes story about him: https://www.forbes.com/sites/ryanmac/2015/05/06/dji-drones-f...
The Wikipedia article is also interesting and shows how ruthless and effective the company was: https://en.wikipedia.org/wiki/DJI (for better or worse)
I mean, compare them to Lenovo, who's done nothing really new since they took over Thinkpads from IBM (except maybe folding convertibles). DJI is the polar opposite of that; they invented not only their own brand of drones, but pretty much created (and then dominated) the entire consumer drone market across the whole world.
If they were an American company, we'd be celebrating their success and Wang would be right up there next to Musk. DJI doesn't nearly get enough credit for the crazy amount of R&D they had to do to get the consumer drone industry to where it is today. Even if some of it is military trickle-down, that doesn't usually happen that quickly and cheaply. Even police & fire, who usually inherit those techs, tend to go with DJI, despite them not being US-made. IMO it's a shame that DJI happens to be caught up in the political turmoil of our times. Their products really are far above their peers. (And I don't even own any; sold my Phantom a decade ago.)
I don't know DJI's financials, but they've been around for nearly two decades by now. If they've been able to fool investors (or even the CCP) for that long while secretly losing money the whole time, well... guess they made a good business out of it? At least they made a useful product, compared to most of our shady ad-tech companies.
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> Western drone companies haven't bothered competing in the consumer space
This is factually wrong. Most drone companies have tried in the consumer space before pivoting towards the military. The military has been more and more present since around 2019, and most Western drone companies have pivoted to the military since Ukraine. Not because it's more profitable, but really because they failed in the consumer space.
Also the military makes it easier for Western companies because DJI cannot compete (obviously). But I am absolutely convinced that DJI is better at making military drones ("micro aerial vehicles") than the West.
Military is 100x more profitable than consumer. It isn’t clear they DJI is even making money since all I can find on a Google search is them bragging about revenue. If they made $3.83b in revenue in 2021, what were their expenses on that (or better yet, what is the break down of hardware/assembly costs vs. R&D costs if they aren't profitable yet)?
You do realize that the Western drone companies are failing at making good military drones, do you? Have you seen what Ukraine had to say about it?
I don't even want to talk about DJI not being profitable. That's preposterous. It's like if I was claiming that Apple is state-subsidized and not profitable.