U.S. Demand for Drones to Reach $4.4B in 2020, Freedonia Forecasts
Military unmanned aerial vehicles or UAVs will remain the largest single market in value terms, accounting for more than half of total spending in 2020.
CLEVELAND – Demand for unmanned aerial vehicles (UAVs), or drones, in the United States is projected to rise 10% annually to $4.4 billion in 2020, and the number of vehicles sold will more than double to 5.5 million, according to research firm Freedonia Group.
There are currently two major markets for drones: the military market, which accounts for the vast majority of demand in dollar terms, and the consumer market, which accounts for more than 99% of all units sold.
Freedonia Group reports each of these markets has very different growth prospects. Department of Defense (DoD) spending for drones will climb at only a moderate pace through 2020 and beyond, tempered by budgetary constraints and a shift in the product mix to smaller, less expensive vehicles. Conversely, most segments of the consumer UAV market are in the early stages of development, and over the next decade sales are forecast to grow at explosive rates.
Much smaller commercial and nondefense government markets also exist, together accounting for less than 5% of the 2015 drone sales total in value terms. Use of UAVs in commercial and to a lesser extent nonmilitary government markets has to date been severely constricted by Federal Aviation Administration (FAA) regulations. Business and public sector organizations have to obtain authorization from the FAA before operating drones in domestic airspace and are required to comply with a number of restrictions on their use.
For example, UAVs are not permitted to fly above 400 feet, have to remain within visual line of sight of operators, and cannot be flown over people not directly involved in their operation. If FAA regulations on commercial drones ease as anticipated, the commercial market will expand faster than any other major market over the next decade in both dollar and unit terms.
Nevertheless, the consumer market will remain a key driver of overall sales growth, fueled by technological advances that are making drones easier to fly, and by the reduced cost and improved capabilities of key subsystems, which are allowing manufacturers to boost product performance without having to raise prices.
Military UAVs will remain the largest single market in value terms, accounting for more than half of total spending in 2020, according to Freedonia Group.
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