One of the biggest technology battles brewing is the war over the flying camera. On one hand, there’s GoPro, the action camera company whose plans to build drones leaked last month. And then there is DJI, the Chinese consumer drone manufacturer, whose easy-to-fly quadcopters have been gaining traction with consumers. The latter recently announced a new platform for people to upload and share aerial photography.
Both bits of news are the kind of developments I have been awaiting for years.
Cameras unquestionably need to fly—you can see the stunning possibilities already with action sports. In the not too distant future, your selfie stick will be replaced by a throwable camera that will hover above you, take a few epic shots and land safely back in your hand. Eventually most video, from a baby’s first steps to weddings, will be taken by a little autonomous flying bot allowing you to stay in the moment.
And while it might seem like the drone wars are just starting and important privacy issues are still being sorted out, I think the winner is already becoming clear. DJI is pulling ahead and has three big advantages: product, technical expertise and talent. I think those will eventually overpower GoPro’s strengths of distribution and marketing.
Moreover, I think the winner could use its base of power to rapidly expand into other adjacencies built off the platform, including things like mapping and analytics. So, the stakes are higher than who takes the market.
Technical Know-how
DJI, whose current in-market flagship prosumer device, the Phantom 2, retails for about $1,500, is clearly the smaller business, but it’s nothing to scoff at. I have heard from knowledgeable people that DJI had 2014 revenues that were somewhere between $300 million and $500 million. They might be still small compared to GoPro’s; the company had revenues of $280 million in the quarter ending in September alone. But DJI is further along than GoPro was at the same age.
When it comes to technology and product, I think DJI has a big advantage. It is just a lot harder to build a drone than a camera, which means that GoPro will have to overcome a big gap to get to a competitive product. DJI is rapidly gaining experience assembling a whole drone stack—from flight control software and autopilots to flight platforms, gimbals, batteries, motors and high-definition cameras. GoPro cameras might be better, but only marginally so, and GoPro is going to have to learn quite a few new tricks to catch up.
The rate of DJI innovation feels like it is dramatically picking up, rapidly carrying them down the “experience curve,” where a company can build better products cheaper and faster. The company’s first prosumer Phantom drone was launched in January 2013 and was the flagship for ten months. The last three iterations have hit within the last fourteen months (Vision 2 in October 2013, Vision 2+ in April 2013, and the Inspire 1 this December), each dramatically better than the one before it. I wouldn’t be surprised if GoPro decided to outsource its drone manufacturing to someone else, at least initially, given the company’s lack of expertise.
And while GoPro benefits from a bigger business, it’s likely to become a slower-growing one as its matures. As an example, I haven’t bought the last few generations of GoPros. The ones I have already shoot at a higher resolution than my laptop can handle. At the same time, I have excitedly bought new drones from DJI in the last 18 months because each is dramatically better than the one before it.
That means that there will be less growth in the part of the business GoPro is dominant at.
GoPro’s Ubiquitous Distribution
If DJI has an advantage in product, GoPro currently has a far stronger brand and much better distribution. Among aspiring action sportsmen, everyone knows its brand and loves its footage. I will be the first to admit that I watched the launch video for the Hero 3 camera on repeat for days. Within this market, GoPro is everywhere, from airports to ski shops. The company has clearly nailed distribution.
DJI is less well-known and just beginning to build a coherent brand. Through October of this year, its marketing message was still largely about tech specs that appealed to hobbyists and professionals. With the launch of the Inspire One last month, DJI has just started to tell an Apple-esque brand story about “flying cameras” as tools for the creative class. But outside of a small world of some drone owners, DJI is far less known than GoPro.
DJI also has a long way to go in terms of distribution. When I tried to pre-order my most recent Inspire 1 from DJI, I got delayed for days because apparently the company could only take PayPal for the pre-orders, not credit cards. That friction can ease over time, but right now it’s a barrier.
Still, it’s unclear how sustainable GoPro’s marketing and distribution advantage will be for drones. Brand loyalty only goes so far in the highly competitive tech industry, particularly if someone else has superior technology. (When I asked a GoPro spokesman if he had a comment for this piece, he noted the company hasn’t announced plans to make drones.)
Talent
The main reason I think DJI is dramatically better positioned than GoPro in the drone wars is its talent advantage.
Great people want to work with other great people, where the fire is the hottest. This creates a huge tendency towards disequilibrium, where pockets of talent tend to be self-fulfilling prophecies, and it is extremely hard to bootstrap a new competency from zero. If you are a rockstar designer or engineer right now who cares about drones, you want to work with the people producing the best product. That is DJI.
Talent also wants to work on top strategic priorities, not side projects. Even if GoPro decides drones are its top strategic priority, it is going to have a hard time getting around the fact that it needs to win at “flying cameras” while still growing its existing camera business as a public company. This is an extremely hard move to pull off, and one which even highly competent people flub. (As an aside, because it is public, GoPro has to deal with the challenge of employee retention with a volatile public currency; DJI doesn’t.)
GoPro is based in San Mateo, arguably one of the most competitive recruiting markets in the country. DJI is in Shenzhen, China. I won’t pretend to know that much about the talent market in Shenzhen, but intuitively it seems like a better place to be situated, with access to talent directly from relevant suppliers, and a much looser and lower-priced (though still enormous) talent base. Obviously companies can attract and hire talent from anywhere over time. But your starting point on the chess board matters.
So, in my mind, DJI has a huge advantage in talent, engineering and product. GoPro has a lead, at least for now, on marketing and distribution. I know which team I would pick in a heartbeat. DJI’s advantages are much harder for GoPro to overcome than vice versa.