Airborne Computers

Intel Stakes its Chips on Drones

  • Why it matters

    Why it matters

    CeBIT is Germany’s largest technology trade fair, attracting 3,000 distributors from 70 countries. This year’s fair is focused on the digitalization of business.

  • Facts

    Facts

    • A variety of drones are on show at this year’s CeBIT, including those from U.S. chip manufacturer Intel.
    • Intel is pursuing the drones business, having been largely passed over by smartphone and tablet manufacturers.
    • The technology used in drones can be replicated in autonomous vehicles.
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    Audio

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CeBIT 2017, 20. – 24. März
Chocks away: Drones are flying high at Cebit trade fair. Source: Cebit

The humming sound is a bit muffled in the drizzling rain. In its first test run, the drone flew a semicircle around the tower and returned back to its starting point, where it touched down on the ground exactly at the feet of the pilot. This device was built to inspect oil platforms on the high seas – miserable March weather doesn’t affect it in the slightest.

This was the scene being played out at the CeBIT technology trade fair in Hanover Monday, where drones are taking to the skies on a major scale. On a field in front of Hall 2, chip maker Intel is keen to demonstrate that unmanned aerial vehicles (UAVs) are more than just toys. Next door in Hall 17, a couple of other companies are flying their own devices. “Drones are already used in many places today,” Intel’s country manager in Germany, Christian Lamprechter, told Handelsblatt. “It’s just that hardly anybody knows about it.”

There is a reason why the world’s largest producer of computer chips is suddenly touting drones instead of processors. The digital revolution has made high-performing, but at the same time affordable, flying devices possible. Most of their components have become mass produced items, thanks to the smartphone boom of recent years. Drones are computers with wings. Intel has belatedly recognized that it has to change with the technology.

“In almost every industry, companies are now buying drones to test and use them.”

Gartner market research

The U.S. firm is hoping to cash in on the automation boom: the UAVs need processors to be able to navigate on their own. What is more, they generate a huge amount of information that is processed in data centers, where Intel’s chips reign supreme. For example, a single flight over a factory or solar installation produces enough photos to fill up the hard drive of a new PC. To gear up, the company acquired several producers of UAVs, including the Munich-based company, Ascending Technologies, for an undisclosed amount in January last year.

All the possible uses for drones are on show at CeBIT. Oil producers are already using the devices in the North Sea to detect damage to oil platforms. Until recently, technicians had to fly in by helicopter to inspect the facilities themselves. Now they only make the trip if they absolutely have to, Mr. Lamprechter said. That saves a great deal of money. Solar installations and bridges can also be surveyed from the air.

The drones business is still modest. Companies and consumers will spend around $6 billion on drones worldwide this year, the equivalent of about one-tenth of Intel’s sales. But the market is growing: researchers at Gartner say that figure increased by one-third in the last year alone. A niche market could soon become mass market, and Intel wants a piece of the action. “We don’t want to miss out on any key new technologies,” Mr. Lamprechter stressed. And with good reason: the company has learned from its past mistakes, having missed the billion-dollar boat with smartphones and tablets.

At the moment, the vast majority flying devices are sold in toy stores. But the real money is found in professional drones. Even though the unit sales are significantly lower, they still represent the bulk of a supplier’s revenue. The reason: last year, consumers spent an average of $835 for a drone. The price tag on an industrial drone, on the other hand, was some $25,000. “In almost every industry, companies are now buying drones to test and use them,” Gartner reported.

Aerial parcel delivery could still be a way off, though. Gartner analyst Gerald van Hoy thinks that logistics companies will account for less than 1 percent of drone usage in 2020. Most UAVs are used for inspection purposes. Among the best-known producers of professional drones are Yamaha, senseFly, and Kespry. Consumers often buy DJI, Parrot or Zerotech.

“At CeBIT 2017, it is more than ever about presenting digitalization in a way that is tangible and accessible.”

Oliver Frese, Deutsche Messe AG

While Intel plays catch up, the lion’s share of its revenue it still generated by its traditional business: making processors for PCs, notebooks and network computers. But if Gartner’s forecasts are accurate, then drone producers will be raking in $11 billion in sales by 2020, nearly double this year’s figure. At the same time, mobile phone networks and data centers will need to update their equipment. It all points to strong business for Intel.

The technology contained inside the drones is also used in autonomous vehicles, which allows Intel to reach out into different markets while still using the same chips. That is why a futuristic BMW i8 is parked at Intel’s stand. “Our goal is to widen our customer base,” Mr. Lamprechter said.

Such statements by companies like Intel are music to the ears of CeBIT’s organizers, Deutsche Messe AG. “At CeBIT 2017, it is more than ever about presenting digitalization in a way that is tangible and accessible,” said Oliver Frese, a member of Deutsche Messe AG’s management board. Ever since the fair started focusing on corporate clients, abstract subjects like cloud computing – the process by which data is stored remotely – have dominated.

This year, drones and robots for commercial use are the focus of the fair. Japan, the partner country of the fair, has played a key role in robotics over the years. The don of Japanese robot research, Hiroshi Ishiguro, will give a lecture looking at the future role of humanoid helpers in people’s everyday lives. Other lecturers include Google’s head of development, Ray Kurzweil, who will discuss whether people will one day be able to store their thoughts and memories in a cloud, and the whistleblower Edward Snowden, who will speak via video link about how to protect networks from hackers.

 

Christof Kerkmann has been an editor for Handelsblatt Online since 2012. He writes about the technology sector. Joachim Hofer covers the high-tech industry and the IT sector as well as the outdoor- and recreational-industry for Handelsblatt. To contact the authors: kerkmann@handelsblatt.com, hofer@handelsblatt.com

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