Explore the Second-Life Market for Drones & Home Assistants

As sales and consumer desire continue to increase for drones and home assistants, the second-life market has a huge opportunity for growth.

Consumers are becoming ever-more enamored with their gadgets and toys. Drones and home assistants are becoming more ubiquitous in our homes (and flying around our skies). However, when these machines run their course — either because they break, or a newer model comes out — is there still use for them?

The market for gadgets

The marketplace for drones is an ever-growing one. Last year drone sales increased by an astounding 60%, and revenue grew to $4.5 billion. The drone market can be segmented into two categories — personal and commercial. Personal drones, which many consumers use for photography, is predicted to grow 40% this year, while commercial drones, which can be used for survey maps and delivery services, are expected to grow 60%.

While personal-use drones dominate unit sales, commercial-drone sales — which make up only about 6% of the market — are projected to represent 60% of the market’s revenue. This is due to the high cost of commercial drones, some with costs that exceed $100,000.

Home assistants are another intriguing category on the rise. These products are intended to control various devices in your home, such as thermostats, lighting, and security. These products also allow an individual to shop online using voice commands.

The frontrunner for this market has been Amazon’s Echo devices. As the primary nature of Amazon’s business is e-retail, the Echo device plays perfectly into this. By making it simple and easy to make Amazon purchases through voice command, these devices have great potential to bolster Amazon’s bottom line.

While this market is still in its early stages, Gartner Research expects tremendous growth, projecting $2.1 billion in consumer spending on personal home assistants by the year 2020.

The second-life market

So what becomes of these products as we replace them with newer models? Smart phones offer a sensible comparison when looking at the second-life market for these products. In 2016, consumers sold or traded in used cell phone devices for an average of $140 per device, generating a total of $17 billion worldwide. This selling and trading doesn’t just end after one transaction. It is predicted that at least 10% of premium ($500 and up) smartphones will have at least three users before they are retired.

We can draw a parallel about second-life potential between drones/home assistants and cell phones. Advances in technology render previous models obsolete or, at best, out of date. Consumers who can afford them will gravitate toward newer products. As with cell phones, they will generally look to recoup some of the cost for the newer product by selling or trading in the old one. These can then be sold to consumers looking for less expensive, older models. Even in the case of drones that crash, parts can be salvaged and sold to individuals that are looking to build their own drones.

The markets for these products are all still in early stages, so second-life markets are still in growth stages as well. As sales and consumer desire continue to increase for drones and home assistants, their life cycle will go on long after the first owners have moved on to newer models.

This post originally appeared on EBN Online.

About author Frank Cavallaro

Frank has over 25 years of experience in the global technology distribution, supply chain, reverse logistics, after-market services and electronic asset disposal (EAD)industries. He has a proven track record of successful growth, restructuring, and turnaround performance, resulting in superior organizational and shareholder results.

Prior to Fronetics, Frank held various leadership positions within public and privately held corporate environments as well as private equity sponsored organizations. His experience includes CEO of Converge, President at Arrow Electronics, as well as COO and General Manager of NECX.

With domain expertise in international management, selling strategies, sales organizations, and global operations, Frank is recognized as an industry leader with the experience, vision, and capability to motivate all levels of your organization to deliver shareholder value, customer satisfaction, and cost control in the competitive marketplaces of international technology, supply chain and logistics.