The third and the last part of this series is about the drone market M&A activity. In this article, you will find a number of interesting facts – about the mergers and acquisitions – that transpired in the drone industry over the last few years. However, we believe that the best collaboration of ideas and assets are yet to come.
To explain what is exactly going on right now, we will distinguish the actors into two categories: “internal” and “external” – or “out-of-segment” – buyer. “Internal” refers to drone companies (such as hard- and software manufacturer) buying or investing into other promising drone companies. On the other hand, “external” refers to technology companies buying their way into the drone market.
What has happened so far
As you must have observed, drone M&A activity started very early, at a time when UAV was not so much of a big deal as they are today. From the outset, only “internal” actors were active acquiring contemporary or complementary technologies. A few years down the road, the whole scenery changed – not just the frequency of M&A activity increased; many “external” actors also took their share from the big pie of the very promising drone market.
Drone Market M&A Activity Highlights
In 2011, the French toy and drone maker Parrot (FRA: PZW) started with the acquisition of DiBcom (100%), a technology company that specializes in high-performance integrated chipsets that enables low-power and high mobility media reception. Investments in software manufacturer Pix4D ($2.4M, 56%), platform manufacturer Sensefly ($5M, 62%) and delair-tech (10%) as well as remote sensing specialist MicaSense ($2M, 39%) followed over the years.
2. Google and Facebook
The two Internet icons have big plans regarding their unmanned vehicle business. The design in both cases however is very similar – the HALE (high altitude long endurance) configuration combined with solar powered engines enables near-earth-satellite operation.
The UK-based Team of Ascenta – an aerospace company acquired by Facebook – (NASDAQ: FB2A) ($20M, 100%) is still working on the platform prototype, which has not yet left the ground. The company’s goal is to build flying relay stations to deliver Internet signal to billions of people around the world, especially in regions where there is little or no internet coverage.
What’s more, Google (NASDAQ: GOOG) followed an environmental approach and acquired the drone maker Titan Aerospace ($60M, 100%) to deliver mainly real-time earth images by using solar powered UAV. It also became part of Google’s Project Loon to use stratospheric balloons to connect the people in the rural and remote areas.
3. Intel and Qualcomm
Intel (NASDAQ: INTC) acquires German drone company Ascending Technologies, as the American company pursues the aerial computing market. Asc-Tech has been using a combination of its autopilot software and Intel’s RealSense camera to bring UAV to a new level in the sense and avoid technology.
The American semi-conductor giant Qualcomm (NASDAQ: QCOM) acquired the aerial robotics company KMel Robotics in February 2015. This is good evidence that Qualcomm will expand its activities around drones. The company already has a research lab dedicated to experimenting with its proprietary hardware and software. Qualcomm’s product – the low-power snapdragon chipset – makes use of multi-core processing and wireless communications for a number of drone applications.
Now, let’s take a glimpse into the future
It’s obvious that the industry is still shaping up. To date, commercial drones are mainly flying cameras, while others applications (like mapping, agricultural uses, etc.) are establishing.
Investors have started forecasting the prospect of an increased growth and M&A activity in the drone sector. Also, the long-awaited rules are introduced to pave the way for commercial flights.
These investors will be “external” tech giants seeking to offer new services to their customers, and mature “internal” drone companies are making strategic investments to secure their future market position.
The biggest investments, including mergers and acquisitions, are expected in flight control software, mapping, cloud services and autonomous technology.
As soon as the regulation for commercial drone operation is published, we can expect a massive consolidation of the hundreds of UAV platform and software manufacturer. Equally important, we should expect investors to deploy capital into startups, primarily on those targeting commercial and industrial applications.