Amazon.com AMZN always has a way of attracting attention — either through fabulous deals or amazing stock performance — around the holidays (throughout the year actually).
Just hours before Cyber Monday, the e-Commerce giant released a video starring TV host Jeremy Clarkson who claimed to be from “the not-too-distant future”. The video showed how drones delivered a child’s soccer shoes in half an hour.
Just A Publicity Stunt?
There is absolutely no doubt that the video is meant to give Amazon a modest amount of marketing buzz during the holiday shopping season.
But could there be more to it?
The video highlights Amazon’s plans, and why many tech companies believe that drones are the future of delivery.
In short, this Zacks Rank #2 (Buy) company simply wants to increase Prime subscriptions.
The decals on the drones say “Amazon Prime Air”, indicating that the service will be available to Prime subscribers. It is actually a brilliant idea to market a slightly futuristic service at a time when customers are likely to sign up for it anyway.
These drones reportedly fly under 400 feet and weigh less than 55 pounds, and thus are within the size limit for small unmanned aircraft systems recognized by the Federal Aviation Administration (FAA).
The video also draws attention to the fact that the drones will fly with an artificial intelligence system capable of recognizing and steering clear of obstacles in the air. Designed to land at designated areas, it is, however, not clear whether Amazon or the Prime subscriber would decide the landing site.
Nothing was mentioned about how long it would take to build, or how such a system will win the requisite regulatory approvals.
A drone of that size will have physical limits on carrying very heavy objects. However, as Amazon is spending a lot of time, energy and money, it has, in all probability, considered how many lightweight products will make a journey worthwhile.
The delivery time, some 30 minutes or less after the order placement, is reportedly achievable as the drone can take off and land vertically, and travel really fast during a horizontal flight within a 15 mile radius.
The Future
Be it Facebook FB, Alphabet GOOGL or Wal-Mart WMT delivering packages or high-speed Internet, Drones seem to be the way ahead.
Of course there are challenges. First collision; second, security (what is to prevent rogue/terrorist drones taking to the air?); and third, air transport network traffic control (how will drones operated by different players at the same level avoid crashing into each other, remain on course and deliver at high speeds all at the same time?).
However, according to the Consumer Electronics Association, which runs the tech convention; though drone technology is at a nascent stage, consumers are projected to spend an estimated $103 million on the devices in 2015, up $69 million year over year. At this pace, the trade group predicts that revenues from the worldwide drone industry could cross the $1 billion milestone within five years.
As Clarkson pointed out, “In time, there will be a whole family of Amazon drones” and we couldn’t agree more.
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