Amazon Drones: Not Ready for Takeoff

The Sweet Promise of Half-Hour Delivery

By

Amazon (NASDAQ: AMZN) founder and CEO Jeff Bezos made a splashy announcement on Sunday night.

He said the company is building a fleet of flying drones for a service called Amazon Prime Air. The eight-bladed robot copters will be guided by GPS and carry small payloads to residences within half an hour's distance of an Amazon fulfillment center.

Back in October, I called same-day delivery the "Holy Grail" of Web retail, and mentioned an Australian company called Flirtey. That company uses drones to fly textbooks to remote customers across the outback.

Amazon, which began as a bookstore itself, hopes to do the same.

Little robotic vehicles are slowly creeping their way into our lives with a buzz and a whirr, and we'll have to make room for them. We'd be fools not to.  They have the capacity to automate tasks on a small and affordable scale, and flying ones can easily go where we cannot.

In November, I even called domestic drones the key to the next aviation boom.

But that is still a long view into the future; and as tangible as Amazon Prime Air seems, it still has dozens of problems to conquer before it could ever become a reality.

amazon prime air drone

FAA Regulations

The FAA has laid down a five-year roadmap for the use of domestic drones, but actual rules regarding air traffic are not going to be drafted for a long time. The FAA says integrating Unmanned Aerial Systems into American airspace without segregating, delaying, or diverting other aircraft "presents significant challenges."

As such, the very earliest the FAA will be able to have rules in place is 2015. The group's long-term outlook for regulation falls between the years 2022 and 2026, so it could really be anywhere from one year to thirteen before Amazon can offer Prime Air.

In short: Amazon might have the technology to fly a package to your house, but there also needs to be a system to free up airspace on super short notice so Amazon can keep a half-hour-or-less delivery promise.

Unclear ROI

The guys responsible for Australian startup Flirtey said it's more cost effective for them to fly small shipments across the desolate spans of Australia than it is to drive them. Chinese delivery company SF Express has been testing its own drones for the same reason.

This is not always going to be the case. For bustling urban areas, unmanned drones have to compete with low-cost ground couriers. After getting a few quotes from a handful of independent courier services, I was able to determine that a single two-pound package costs between $37-$50 to be delivered fifteen miles across the city of Baltimore. This could take anywhere from two hours to four hours.

Assembling a fleet of GPS-piloted drones will be just the first major investment for Amazon. It will then have a host of recurring costs with the staff that oversees the dispatch and control system, the electrical energy that keeps the bots aloft, and general service and maintenance.

This doesn't even include the new insurance liability they present. Each drone and system will require a new type of commercial vehicle insurance, and though there are companies that currently offer UAV insurance, delivery is a new frontier.

If we did a SWOT analysis for Amazon Prime Air, the weaknesses and threats would be dominated by various extra costs and high competition.

Weather

"Neither snow nor rain nor heat nor gloom of night stays these couriers from the swift completion of their appointed rounds."

It's the unofficial US Postal Service creed, but it isn't likely to apply to delivery drones. As impressive as the current designs are, they are anything but robust. Unfavorable weather, such as high winds, lightning, and freezing rain could down an entire fleet for days. This is a common problem for military drone operators.

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Theft/Vandalism

Speaking of drones as flying targets, a solid swat from human hands could also knock a drone off course and into a stationary object. From there, the valuable robot could be stolen and stripped for parts or held for ransom.

This problem doesn't require too much thought, as it seems to be the first one that people consider when they see a drone carrying a package. What's to stop dishonest people from knocking it down and stealing its payload?

Range/Limitations

Amazon currently has fulfillment centers in 15 of the 50 United States, and is building in four more. If the delivery window is 30 minutes, this doesn't give much range to the service.

"Octorotor" drones similar to those shown by Amazon have top speeds of 30 to 40 mph, so that means the maximum distance they could fly at top speed would be about 20 miles.

This is, of course, an extremely rough estimate. The weight of the payload has a big impact on speed, and so do weather conditions and air traffic limitations. If airspace cannot be cleared for delivery within 10 minutes of order, for example, the delivery range would effectively be chopped down by a third.  There are huge limitations.

In the end...

Amazon Prime Air is being shown of as feasible "from a technology point of view," but it's extremely optimistic to think that Amazon could carry out such a program even if the FAA had clear regulations on the books.

Don't get me wrong, it's exciting, uplifting, and fun... but it's also risky as hell.


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