Amazon’s first Prime Air delivery is just more drone hype
Flirtey, which calls itself “the world’s first drone delivery service,” used a drone in October to bring its investors socks and a “save-the-date” invitation for its 100 millionth drone delivery.
Not mentioned on the save-the-date: the actual date. That would be hard to predict, since Flirtey has yet to make 1,000 deliveries, instead using one-off stunts to sustain interest.
Flirtey has logged a series of media-friendly delivery “firsts” including the first-ship-to-shore drone delivery, the first FAA-approved drone delivery to a customer’s home, the first urban drone delivery.
DominoFlirtey CEO Matt Sweeny, Domino's Pizza Enterprises CEO Don Meij and Transport Minister Simon Bridges at the first Domino's delivery via drone
A partnership between Flirtey and Domino’s Pizza Enterprises Limited DMP, -2.64%to create the first-ever drone pizza delivery service received plenty of press, but it can only deliver to buildings within 1 mile of a single store in Whangaparaoa, New Zealand. As of the end of November, it had made four deliveries since the original launch, according to a Domino’s spokesman.
The latest high profile drone delivery came on Dec. 14, when an AmazonAMZN, -0.87% test flight made its first delivery to a home near Cambridge in the U.K. — a Fire TV and a bag of popcorn. The news was covered as “a major step for drone delivery” as outlets touted how drone delivery “just became a reality.”
The reality is that the service currently services only two customers. Over the next several months it will expand to dozens who live near the company’s warehouse.
Meanwhile, according to investors and drone experts, hype and headline-grabbing experiments like Flirtey’s, Amazon’s and those of other big names like Wal-Mart Stores Inc. WMT, -0.07% and Alphabet Inc. GOOGL, -0.52% GOOG, -0.27% — could distract from more substantive, potentially lifesaving opportunities for the technology.
Logan Campbell, CEO of drone consulting firm Aerotas, says drone delivery has a viable future delivering high value, urgently-needed items, like a heart transplant being shipped to a hospital. For now, though, obstacles including laws and financial realities, obscure the long path to widespread drone delivery, and there has been little documented movement toward it in more than five years.
“It’s not a business, it’s a science fair project,” said Campbell. “It’s not a step toward a viable, independent business project. I say that with the perspective that science fair projects can be a great thing.”
The legacy of TacoCopter
In July 2011, a startup called TacoCopter successfully documented the first drone deliveries — tacos, of course. Within a week, TacoCopter was viral gold, establishing the legitimacy of the idea and a pattern for the fledgling industry.
TacoCopter did not become a more fully-fledged commercial operation, partially because strict Federal Aviation Administration rules made drone delivery illegal — which is still an obstacle. Its founders now say TacoCopter was never intended to deliver tacos: They were a crowd-pleasing placeholder to prove that drones could deliver high-value items.
Since then, startups and major corporations have poured money into drone delivery, with delivery companies partnering with high-profile retailers and other organizations. Amazon made headlines in 2013 when Chief Executive Jeff Bezos announced on 60 Minutes that it would be using drones to deliver packages. Three years later, it is touting an extremely limited drone delivery service.
Other companies have also touted drone delivery services. McDonald’s MCD, -0.43%has suggested using drones to deliver food to customers’ cars as they drive down the highway; and Coca-Cola KO, +0.80% once used drones to bring boxes of Coke cans to construction workers in Singapore.
Amazon’s December flight delivered a 4.7 pound package, taking 13 minutes to cover about 2 miles, flying from an Amazon warehouse over the English countryside to a landing pad placed in a customer’s yard.
Its founders may not have intended it, but TacoCopter created the blueprint for selling drone delivery to the public: Drones doing cell tower inspections or land surveying don’t make headlines. Flying tacos do.
“Drones bringing tacos captured the imagination of people,” Skylogic Researchfounder Colin Snow said. “They created a vision. But reality sets in for the majority of people when they recognize it’s a business that has to scale and make money.”
More like a ‘science fair project’ than a business
Flirtey’s first public demonstration was delivering textbooks in October 2013 (just before Bezos’ announcement about Amazon Prime Air), which attracted a series of high-profile media stories from sites ranging including TechCrunch, Business Insider, The Verge and CNN. A spokeswoman said Flirtey ended up delivering about 100 textbooks in total.
Flirtey won funding from investors including Y Combinator, Qualcomm and Menlo Ventures. It has struck high-profile partnerships, including one that led to a test in July that sent Slurpees, doughnuts and other 7-Eleven food from a Reno, Nev., store to a customer’s backyard less than a mile away.
While most of those deliveries were one-offs, Flirtey Chief Executive Matt Sweeny said the company is now focused on moving into “the next phase of our operations, where we’re doing regular deliveries to select homes.”
“We’ve come a long way,” Sweeny said. Referring to the sock drop, he said that “to my knowledge no one has conducted a drone delivery in a suburban environment before, certainly not in Silicon Valley.”
Some analysts don’t see much difference between Flirtey’s drones and what’s already on the market. Sweeny said Flirtey drones can carry payloads up to 5.5 pounds for around 20 miles; that payload capacity is similar to DJI’s publicly available Matrice 600. He also says the company’s custom drones are more reliable than other offerings, and that its software allows autonomy in flight, meaning the drone doesn’t need someone with a remote controller in hand to maneuver it; many commercially available drones, including DJI’s Phantom line, which cost as little as $500, can fly autonomously with preprogrammed GPS points.
Flirtey’s business plan calls for delivering food, consumer goods and medical and humanitarian shipments. But analysts — and even Flirtey’s investors — question a business plan that involves consumer goods and food.
“I personally think high-value, business-to-business, is the most obvious use for drone delivery,” said Y Combinator partner Dalton Caldwell, who cited an organ transplant shipped between hospitals as an example.
Still, Caldwell said he is optimistic that any delivery that gives the company more flight test hours is a good delivery. “Flirtey’s founders are doing what they can to get customers and to get people excited about it,” he said.
10,000 times more expensive than FedEx
Where will that excitement lead? Drone delivery companies in the U.S. face tricky government regulations, including rules that require drones to remain within a pilot’s line of sight and not fly over people who aren’t involved in the commercial flight.
There is also the issue of air-traffic control for drones. NASA won’t present its research on drone traffic management to the FAA until 2019.
Companies also face a stiff logistical test in moving from one-off tests to regular, on-demand deliveries. That scaling is the biggest challenge, according to Joshua Ziering, founder of now-defunct drone company QuiQui, which was intended to deliver pharmacy items. Ziering has since turned his attention to building Kittyhawk, a fleet-management platform.
“The logistics of having a base station [where drones are loaded with cargo], battery charging and maintenance operations are challenges that go into being able to scale,” said Ziering.
Even if those hurdles are overcome, such a system might not be financially feasible. A drone is faster than a car but slower than an airplane, and while cars and planes can carry freight by the pound or the ton, most drones only carry a few pounds.
“Drone delivery is about 10,000 times more expensive than UPS or FedEx Ground,” said Campbell. “Ground infrastructure is really efficient. Look at Google Express and TaskRabbit. Even a fully scaled drone-delivery program will be hard-pressed to create cost advantages.”
“For the vast majority of goods, drone delivery does not make economic sense,” Campbell said. “The key is finding a big enough niche where people will be willing to pay this huge price premium for, honestly, a marginal improvement in speed.”
To find areas where huge delivery premiums might make sense, economists look to an item’s “value density” versus urgency. A lightweight, expensive item like an organ for transplant has an extremely high value density and typically needs to be delivered as soon as possible, while a heavy, low-cost item like a brick has a low value density and is likely not an immediate need.
By this formula, some say, there is little economic case for delivering anything other than light, high-value items with a drone.
“I would focus on high-value applications like emergency medicine, rather than pretending that people will get milk and eggs delivered by drone anytime soon,” Campbell said.
Getty ImagesA technician of California-based robotics company Zipline launches a drone in Rwanda in October.
A place where drone delivery offers legitimate value for humanity
Drone delivery is working outside the U.S. in fields including medicine and disaster relief. Startups such as Zipline are making deliveries to underdeveloped countries, where poor road infrastructure can make it near-impossible to reach rural areas. Spokesman Justin Hamilton says Zipline has a large-scale operation delivering blood in Rwanda, for example.
But even with looser regulations and less congested airspace, scaling and logistics are challenges in underdeveloped countries. While Zipline makes multiple shipments every day, the company still isn’t doing the on-demand deliveries it intended. Each delivery route needs to be checked by the government before it can be flown, and the hospital needs to be prepared to receive and test each item before administering it to a patient.
Many major drone delivery stakeholders have dialed back on food drone delivery, including Alphabet’s Project Wing, the drone unit of Alphabet’s X research team that recently delivered Chipotle burritos to Virginia Tech students using technology similar to Flirtey’s.
Employees told The Wall Street Journal that some viewed Project Wing’s Chipotle tests as a publicity stunt. Travis Mason, Chief of Staff at Google X Engineering, said the deliveries were a learning opportunity for delivering items that do gain economic benefit via drone delivery.
“It may seem gimmicky or comical, but it was a really important effort for the team,” Mason said at the November Drone World Expo in San Jose. “A month ago, we delivered in our eyes the first delivery — not demonstration — but effort to deliver goods to customers.”
Mason said burritos were a placeholder for testing high-value items. “Why deliver food? Food presented the most maximum learning opportunity. Food is fragile. There is an expectation for it to be fresh. There is an expectation I get it on time,” he said
While Google is pivoting in its delivery operations, Flirtey remains committed to deliveries like socks and pizzas, and claiming a lot of industry “firsts” in the process. CEO Sweeny says he believes Flirtey will provide on-demand drone-delivery services, not just one-off tests, within five years.
“We’ve spent two years and millions of dollars to enable drone delivery to scale,” he said.
But until the concept is proven on a wider scale, some experts say the hype around “first pizza delivery via drone” or “first drone delivery in Silicon Valley” does little to advance the legitimate uses of the technology.
“It’s all a pretty good publicity stunt,” said Skylogic’s Colin Snow. But “We have a long way to go before we have widespread drone delivery.”
Even some people in the industry itself criticize the industry’s focus on ‘bling’ rather than delivering items that offer that Hamilton calls “a legitimate value for humanity.”
“These other companies do a very media-friendly announcement stunt, like ‘I delivered a Slurpee or a burrito,’” Hamilton said. “It’s always a one-off thing.”
This story was first published on Dec. 1, 2016. It was updated to note Amazon’s December drone delivery.
Source: Sally French, MarketWatch