Microsoft's bet on drone mapping (MSFT)

Microsoft is betting that as drones proliferate, demand for mapping services and platforms will grow; this was recently demonstrated by the tech giant's investment in the real-time drone-mapping startup AirMap, according to The Verge.

The larger $26 million Series B funding round was completed earlier this month and included Qualcomm and Airbus.

AirMap provides software that offers drones information about other aircraft in their immediate airspace, as well as notify individual drones where other members of their fleet are in real time. Notably, AirMap also incorporates FAA No-Fly Zone updates — any company using its services can steer its drone fleets away from prohibited airspace.

Microsoft is likely assuming that its large enterprise clients will soon integrate drones into their operations and therefore need mapping services. Microsoft’s primary revenue stream comes from software contracts with large enterprises in sectors ranging from energy to healthcare and agriculture. If these clients soon integrate drones into their operations, demand for drone-mapping services for their drone fleets will likely grow. For example, if a manufacturing client of Microsoft’s Azure cloud services integrates drones into its operations for inspection purposes, it would also benefit from a solution like the one offered by AirMap.

The investment shows that large tech firms are recognizing that the drone-mapping market, which was once populated primarily by startups, will grow in the coming years. While Microsoft may not believe that AirMap's solution is revolutionary, its investment in the company signals that the tech giant hopes to gain an early-mover advantage in the drone-mapping space. Below are several startups with offerings that compete directly with AirMap and Microsoft, if it moves substantially into the space:

PrecisionHawk is a Pennsylvania-based company that offers DataMapper, drone-mapping software that also provides 3D modeling and vegetation analysis.
Ersi is a California-based firm that specializes in data analytics for drone fleets and provides mapping software similar to AirMap's.
Skyward is an Oregon-based firm that was recently bought by Verizon. It primarily offers broad software management for drone fleets, which includes mapping software that's somewhat similar to AirMap's.

Drones turned the corner in 2015 to become a popular consumer device, while a framework for regulation that legitimizes drones in the US began to take shape. Technological and regulatory barriers still exist to further drone adoption.

Drone manufacturers and software providers are quickly developing technologies like geo-fencing and collision avoidance that will make flying drones safer. The accelerating pace of drone adoption is also pushing governments to create new regulations that balance safety and innovation.

Safer technology and better regulation will open up new applications for drones in the commercial sector, including drone delivery programs like Amazon’s Prime Air and Google’s Project Wing initiatives.

BI Intelligence, Business Insider's premium research service, has compiled a detailed drones report that forecasts sales revenues for consumer, enterprise, and military drones. It also projects the growth of drone shipments for consumers and enterprises.

The report details several of world’s major drone suppliers and examines trends in drone adoption among several leading industries. Finally, it examines the regulatory landscape in several markets and explains how technologies like obstacle avoidance and drone-to-drone communications will impact drone adoption.

Here are some of the key takeaways from the report:

We project revenues from drones sales to top $12 billion in 2021, up from just over $8 billion last year.
Shipments of consumer drones will more than quadruple over the next five years, fueled by increasing price competition and new technologies that make flying drones easier for beginners.
Growth in the enterprise sector will outpace the consumer sector in both shipments and revenues as regulations open up new use cases in the US and EU, the two biggest potential markets for enterprise drones.
Technologies like geo-fencing and collision avoidance will make flying drones safer and make regulators feel more comfortable with larger numbers of drones taking to the skies.
Right now FAA regulations have limited commercial drones to a select few industries and applications like aerial surveying in the agriculture, mining, and oil and gas sectors.
The military sector will continue to lead all other sectors in drone spending during our forecast period thanks to the high cost of military drones and the growing number of countries seeking to acquire them.

In full, the report:

Compares drone adoption across the consumer, enterprise, and government sectors.
Breaks down drone regulations across several key markets and explains how they’ve impacted adoption.
Discusses popular use cases for drones in the enterprise sector, as well as nascent use case that are on the rise.
Analyzes how different drone manufacturers are trying to differentiate their offerings with better hardware and software components.
Explains how drone manufacturers are quickly enabling autonomous flight in their products that will be a major boon for drone adoption.

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