DJI Innovations, the biggest drone maker in the world, just unveiled the Osmo, its first stand-alone handheld camera. The 6.4" long Osmo, DJI's first non-drone device, weighs less than half a pound and features a 4K camera mounted on top of a handheld stabilizer. The company claims the stabilizer lets users shoot smooth 4K video regardless of how the device is held or moved.
The 12-megapixel Zenmuse X3 camera, which was previously integrated with the DJI's Inspire 1 drone, can capture 360-degree panoramas and record slow-motion 1080p videos at 120 frames per second. The camera can also be remotely controlled via a companion app on a mounted smartphone.
While the Osmo can't be considered a direct competitor to GoPro's (NASDAQ:GPRO) HERO cameras, it strongly suggests that DJI intends to expand into other forms of action photography to challenge GoPro. Meanwhile, GoPro plans to launch a drone of its own next year to take on DJI's market leading drones. Will these two companies collide on two fronts, or is there enough room for both to thrive?
DJI's evolution from a GoPro partner to competitor
DJI expects its annual revenue to double from $500 million in 2014 to $1 billion this year. The company's success, fueled by the popularity of its flagship Phantom drones, inspired competitors like Parrot and 3D Robotics to enter the market.
Many of DJI's earlier drones were equipped with mounts for GoPro cameras. That likely inspired GoPro to start developing its own drones, but many of DJI's newer drones now come with integrated cameras, which cut GoPro out of the loop. However, DJI's integrated "cameras" only consist of a lens and sensors, while all of the image processing is done within the drone's guts.
Those integrated cameras lack the flexibility of GoPro cameras, which can be removed for other purposes. Moreover, the combination of a cheaper DJI drone, like the $500 Phantom 2, and a GoPro Black ($500) is actually a more economical 4K setup than the DJI Inspire 1, which costs nearly $3,000. However, DJI also sells other drones with non-4K integrated cameras for much lower prices.
Should GoPro worry about the Osmo?
As for the action camera market, GoPro shouldn't worry about the Osmo stealing its thunder yet. DJI admits the Osmo isn't that durable and can't survive big drops or be submerged in water. The Osmo's form factor is also designed to be held instead of mounted, which makes it less suited for surfers or bikers, and its 94-degree field of view is much narrower than the HERO4 Black's maximum FOV of 170 degrees. At $649, the Osmo also costs a lot more than GoPro's HERO4 Black.
However, the Osmo could represent DJI's first step into the action camera market. If DJI launches more cameras comparable to GoPros, it could evolve into GoPro's first meaningful competitor in the action cam market.
Still, GoPro still has several advantages against DJI in action cams: a first-mover's advantage and solid brand recognition. Second, it has an expanding social media presence, which has become a foundation for original content, content licensing, and viral promotion. Lastly, it's developing a digital ecosystem of editing and sharing apps that will eventually connect to its upcoming cloud platform. These strengths have kept rivals like Sony (NYSE: SNE), Kodak, and Polaroid at bay, and they will likely also work against DJI.
Enough room in the air for both
In the U.S., the FAA still hasn't provided clear regulations regarding consumer drones. Nonetheless, the agency recently predicted that over a million drones will be sold this holiday season. Since the average consumer drone costs about $500 to $1,000, that equals sales of around $500 million to $1 billion in a single quarter. Most of those revenues will likely go to DJI, since it's the market leader, and GoPro won't have a drone on the market yet.
But looking further ahead, research company Teal Group expects annual spending on all drones (consumer, commercial, and military) worldwide to nearly double to $11.5 billion over the next 10 years. That means there could be enough room for DJI, GoPro, and other companies to all thrive without experiencing mid-air collisions. It's also unlikely DJI will stop selling drones with GoPro mounts altogether, considering how popular and versatile the stand-alone action cameras are.
However, DJI and GoPro could have a hard time expanding into each other's markets, because they both enjoy the first-mover's advantage in drones and action cameras, respectively. Therefore, DJI and GoPro might be set to collide in two different markets, but it's unlikely either company will triumph over the other overnight.