For a change of pace, let’s bring in an outsider’s opinion. For this posting, I’d like to cite the Gartner Hype Cycle as a source for which emerging technology trends businesses and investors should select as “game changers”. I will follow Gartner’s research through the years and highlight those technologies that support the U.S. Drone Industry.
Back in the mid-teens, I used to use the annual Gartner Hype Cycle as a tool to help me select investments in small innovative companies who specialized in emerging technology. For several years, I was able to track my investments’ progress through the cycle, and make an early exit before it went sideways or downward. I actually found it to be a fairly reliable tool; it even helped me get a few multibaggers. Out of all this speculation, I never lost money on any single investment that was based on Gartner. Overall, I was very net-positive in my Speculation portfolio.
Yes, this is a form of timing the market. Yes, this strategy included penny stocks. Yes, it was based on free advice I found on the Internet.
It’s not terribly different than what brought you to this blog, is it?
I do confess that I’ve fallen out of love with Gartner’s publication in recent years. In 2018, it stopped tracking any technology beyond the Trough of Disillusionment, as if it simply disappeared into a void. The most recent release (2021) ends at the Peak of Inflated Expectations. Widespread technology, such as Augmented Reality (AR), disappeared from the chart in 2019; I would argue that AR currently resides on the Slope of Enlightenment. I do not fully understand Gartner’s reasoning for the diminished follow-through, and I hope that they resume the full Hype Cycle coverage in the future.
I still believe that the Hype Cycle provides a valuable tool to gauge the efficacy of emerging technology, and set expectations for the inevitable and temporary loss of public interest. So let’s take a look at the last several years’ worth of Hype Cycle charts to see what they say about drone-related technologies.
As you can see, “Commercial UAVs” enjoyed a spot on the Hype Cycle in 2016 and 2017 as it rounded the Peak of Inflated Expectations. Based on the icons they used, Gartner predicted that UAVs would hit mainstream adoption circa 2021-2022. I think it would have been appropriate to carry UAVs on the Plateau of Productivity for another year or two, but one message is clear to me: Commercial UAVs are no longer hype-driven—they are mainstream.
“Light Cargo Delivery Drones” also enjoyed a spot on the list in 2019, with an anticipated maturation in the 2024-2029 timeframe. If you recall from a previous article, three major logistics companies announced intentions for Drone Delivery in 2014, and one U.S. company launched a major drone-based medical delivery operation in Rwanda in 2016.
It is no great surprise that Drones fell off the chart. After all, it is a “Hype Cycle” chart, and drones have transcended beyond mere hype and into mainstream productivity. The undiscovered country lies not necessarily in new technology, but in broader adoption in a variety of new use cases. The barriers to broader adoption are not a lack of innovation, but the stranglehold of policy.
There are some other trends that I highlighted on these graphics: the Communications, Data Processing, and Human-Machine Interface (HMI) technology families. Until we discover a novel form of propulsion or power storage, I feel that these three categories of technological development offer the greatest potential for the U.S. Drone Industry’s technology maturation roadmap. Better batteries are incremental improvement, but a 3-D holographic interface would be an evolutionary leap. These are the companies that I would be on the lookout for as potential multibaggers.
As you are screening for innovative companies that promise to change our way of life, remember that there is more to the Drone Industry than the aircraft itself. A piece of metal and plastic flying through the sky is mildly interesting; an efficient method to gather, process, and present data is highly fascinating. Any drone-related company that develops revolutionary technology for generating and managing large volumes of information should get your attention.
As always, conduct your own investment research, and consult with a financial advisor before making any investment decisions.
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