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Demand for drones is exploding

Drone sales surpassed the $1 billion in revenue mark for the first time this year, as both hobbyists and companies are tapping into the flying devices for a growing number of uses — from taking selfies to inspecting railroads.

Data: Consumer Technology Association; Chart: Andrew Witherspoon / Axios

Why it matters: Major tech companies including Google, Amazon and Intel are investing millions to developing drones for their own business uses. Amazon, for example, wants drones to deliver packages directly to your doorstep. The industry is working with the Federal Aviation Administration to come up with new drone guidelines to enable the new technologies to take flight. But the government in general is wary of opening up the skies to millions of drones that could cause safety, privacy and national security hazards.

The current market:

  • Personal drones are the most popular, becoming extensions of smart phones to take aerial photos and action videos— but they are also being used for business purposes like real estate and insurance photography and broadcast TV. They are smaller (weighing under 250 grams) and do not need to register with the Federal Aviation Administration to be used.
  • Commercial drones are equipped with sensors and other stabilizing technologies to make them safer in flight. They are typically specialized for things like 3D mapping, package delivery or inspecting industrial equipment. Commercial operators can fly drones under 400 feet during daylight hours as long as the drones stay within the visual line of site and do not fly over people.
  • The FAA can grant a waiver for other commercial uses — such as the Super Bowl halftime light show featuring Intel-powered drones.
  • Drone demand is growing fast as the FAA streamlines the waiver process to make it easier to get permission to fly drones for specific purposes — but those developing the drones would like the process to move faster.

Where the market's going: Tech companies and shipping logistics operations want to put drones to work to deliver packages or keep tabs of hundreds of miles of highway or power lines.The FAA expects more than 400,000 unmanned aerial vehicles could be flying for commercial purposes over the next five years. That's a more than six-fold increase from today.

A few examples:

  • UPS has tested a drone that launches from the top of a package car, autonomously delivers a package to a home, and then returns to the car while the driver continues on a different delivery route.
  • Tanker company Maersk has tested drones for ship-to-ship deliveries in the North Sea.
  • Amazon Prime Air wants to use drones to get packages to customers in less than 30 minutes. It demonstrated this at a conference earlier this year.
  • In an even more ambitious project, Airbus's Silicon Valley arm is building an pilot-less aircraft designed to carry a single passenger or cargo. It plans to fly a full-size prototype this year.
  • Media companies are already among the biggest users of drone technologies to get footage of stories unfolding and entertainment purposes. Snap, for example, is reportedly in talks to acquire the selfie-snapping drone.

"There are great applications for package delivery to speed up business and lower infrastructure costs," says Brian Markwalter, SVP of research and standards for the Consumer Technology Association. "There may also be specialized cases to try to get medicine or supplies to hard-to-reach areas."

But: Functions that take the drones beyond an operator's line of sight are not yet allowed by the FAA without going through the waiver process. Brian Wynne, CEO of the Association for Unmanned Vehicle Systems International, told Congress in May that "government needs to do more to support it and advance innovations such as delivery services."

What's next: Companies developing drones are working with the FAA to better integrate the technologies into the national airspace, such as building a standard for remotely identifying owners of drones. A recommendation for remote tracking could come by the end of the year. Companies are also participating in advisory committees to develop roles for state and local governments.