So why did Jeff Bezos pre-announce plans for drone-based delivery now?

38 Comments

We live in a shock-and-awe media landscape. Jeff Bezos, the mastermind behind Amazon, did precisely that when he shared plans for a drone-based delivery service that will at some point in the future start bringing packages to your home in about 30 minutes. It was a masterful video demo — shared with 60 Minutes’ Charlie Rose, who obviously was so amazed by the video that he forgot to ask a few important questions.

AmazonDrone1

My takeaway from the video was the following:

  • It was less about drones and more about the growing importance of algorithm-augmented retail.
  • It is also a pretty broad swipe at all local retail, especially big box retailers such as Walmart, Kmart and Target. Those other guys are fighting to get their services web and mobile ready, while Amazon (s AMZN) is fine-tuning what matters most in digital commerce: supply chain and speed of delivery. Amazon is optimizing its supply chain to go from beyond delivery on the same day to within a few hours, with ultimate ambition of being less than an hour.
  • It is thumbing Google (s GOOG) and eBay (s EBAY) in the face, saying, go ahead, experiment all you want with same day delivery. Retail is Amazon’s core business and it is doing whatever it takes to get even more efficient at it.
  • I wouldn’t be surprised if it starts using an Uber-like service to start implementing a version of this pretty quickly. Even WalMart is experimenting with crowdsourcing delivery of packages and it makes most logical sense.
  • It is a good way to push UPS, FedEx and USPS to come up with new delivery models befitting this new changed retail and consumption landscape.

Having followed Amazon for nearly 15 years — the first five years as a skeptic, then as a believer — I am always impressed by Bezos’ audacity and desire to constantly push the envelope. He sees the importance of things & trends long before everyone else — especially if those trends help Amazon sell more things in a faster, cheaper way. And in nearly 15 years of following the company, I can say it is fairly cautious (and quite secretive) when it comes to revealing its future plans. It is reticent to share details and when it does, much like Apple, it shares its own version of truth and data.

Which leads me to ask the question: Why did Bezos announce Amazon’s plans now, especially when everyone knows that the legislative issues around commercial deployments of drones are as matted and entangled as the hair of someone who walked across Kalahari? Even Bezos, in his chat with Charlie Rose, pointed out that it will be a few years before the rules are modified. (Related reading: A new Babylon and rise of the tech tycoon.)

There are many theories — for instance, this is a way to put pressure on the FAA (very plausible.) There are many legal issues around drones, and I think being pre-emptive isn’t such a bad strategy. Others might think that Amazon is trying to get a lot more holiday mindshare (not that it needs it) or just that it wants to divert attention from some possible future bad news? What is your take?

PS: Lot of responses to this on my Twitter feed. Here are some of them:

[youtube=http://www.youtube.com/watch?v=98BIu9dpwHU&w=560&h=315]

38 Comments

ameyer32

I can’t remember what Kosmo’s delivery timeframes were, but I would guess it was around 30 minutes.

F M Ire

So if I want to buy the drone it can just fly itself to my doorstep. Neeat.

Asteroza

It’s just another take on the the MatterNet concept. Endgame is on-demand delivery, so you can receive when you are actually at home, or allow dumping a delivery container in your presumably more secure backyard (compared to your front porch. Possible spoiler is cutting delivery firms out of the revenue pie, which leads to an overall logistics based concept endpoint, 3D printing at logistics centers. If Amazon allows light customization of simple objects at high resolution, then why even buy a home 3D printer at all? With only printer ingredients as an input to a logistics center, it cuts out backend logistics suppliers/product shippers from the revenue pie too. Anything more complex is a conventional product that is shipped and stored on-site like a normal warehouse. Pickers get Kiva robots to deliver goods, but now they also have to pack for balance in the travel container.

So, Amazon sets up Shapeways type facilities at logistics centers, sends packages after packing/completion of printing on the demand of the customer. Use cell networked cameras on the drone to allow Amazon mechanical turkers to check landing sites for safety prior to setting down. For more range, a chubbier version of a hybrid flying wing/quadcopter like a Quadshot with the container recessed in the centerbody would work decently.

Bruce Benes

For a company that is barely making a profit, they had better focus on generating a profit rather than exploring far out strategies. I suspect this is a diversion for upcoming future bad news on earnings. Amazon has earned less that 3% on a revenue stream that has nearly doubled over the past three years. Each year it gets worse – so where is the economy of scale? In drones?

Shawn Behnam

Shouldn’t 3D printing solve all these problems by the end of the decade?

Looking Glass Medicine

Well now that Amazon is the largest data holder for the NSA it makes sense that they will be using drones to track the entire US population

Oneasasum

I think the “now”, as in right this second, was a PR/advertising stunt. But the answer to the question of “why this season?” could simply be that they think their research into autonomous drones is far enough along to where they can see it has a chance of actually working… in 4 to 5 years.

Interestingly, Amazon is hiring experts in Deep Learning, and it appears they have a particular interest in Computer Vision (CV). Why computer vision, specifically? Well, I suppose it might be useful for some of their yet-to-be-released consumer technology items we’ve heard about (e.g. their smartphone); but it would also be extremely useful to them — in fact, necessary — if they are truly pursuing drone delivery.

Om Malik

Thanks for a thoughtful comment. i think you are right about the long term but I am going to see them use more machines in their entire operation – robots, drones whatever to keep pushing the envelope. Good of you to share information on Amazon’s hiring patterns.

K Nichols

My guess is because of the huge drone debate and also FCC regulation — that they realize that this issue needs to be vetted in the court of public opinion as well as the court of law/FCC regulations. Personally, there’s nothing I need so badly as to have to have it air dropped to my home. I would rather do the drive to the local store and get to know my neighbors along the way.

Bruce

I just wonder if he’s ever going to get his Blue Origins spaceships flying.

We’ve been hearing about those for over 10 years and still nothing.

tarunvignesh

I think it is to gain PR besides creating confusion in its competitors’ ranks. Like flying cars drone-delivery is quite far off. The challenges are numerous besides technical / regulatory. How would they ensure drone-package safety ? weather conditions?

I won’t be surprised if Amazon is using these drones internally in their warehouses for prototyping and field testing.

drb

Perhaps they could team with Google on helium-borne hotspot/warehouses that would drop the products to glide down on recyclable foam wings.

Thomas Vander Wal

From a regulatory and future legal perspective I think Amazon needed to put this out there now. The personal privacy communities (don’t use your drone to spy on me you creep) and safe airways (don’t fly that into my helicopter nor into the side of my car / head / bus) contingencies have been pushing for regulation. There have not been a real use case other than hobbyists and academics who have been laid out before legislators and regulators as of yet. The “let’s ban the Segway” before it gets any traction for use has been concern for those thinking through the viable uses for drones for regular life (non-military / spying).

Bezos putting the drone delivery option out there gives some potential positive uses that legislators and regulators can thing about when considering what to do with drones.

tpiccirilli

30 minutes or less? Hello, Dominos. Drone the order to the local branch and pay them to hit the house while making their pizza route. Work it with any other speedy local food delivery service.

txpatriot

This was probably filmed weeks in advance, so I doubt it was timed to distract from the working conditions story

Sam Bolgert

I agree with the shock and awe strategy. Big box retailers are no where close to amazons fulfillment speed. Bezos is baiting them into a “me too” strategy.

On additional uses for drones I was hypothesizing healthcare use for first responders. Imagine being able to deliver a life saving shot to someone having a heart attack or stroke minutes before the ambulance gets there. Instant delivery, regardless of “how” (drone, teleport, magic) has HUGE potential.

Mandeep Bhullar

Between driverless cars and drones, I think the former will come to fruition much sooner. If I understood correctly the range of the drones is relatively small because of battery life that would mean many more fulfillment centers will need to be built. But I agree it’s pushing the envelope that counts, fiction of 5 years ago is now reality.

Michael Cunnyngham

i think there are several valid reasons. Bezos becoming seen as more like Jobs in the ‘ And one more thing” could add value to the stock. On a more practical stance, its likely that the FAA testing guidelines would make it near impossible to maintain secrecy much longer. The most likely application for drones in the near future, and one that would require absolutely no license, would be an uber like model where the drones reside on carrier vehicles that are dispatched out into the city. The vehicle driver could then launch a drone line of sight to drop a package at a destination, or even multiple drones to multiple locations at the same time. Imagine an amazon van pulls into your neighborhood and launches a swarm of delivery drones. One driver could deliver 100 packages in maybe 300 seconds. Now that’s efficiency.

Om Malik

Michael

All fair points and thanks for sharing your feedback. I do think this whole drone-thing is a headfake for their real ambition: deliver within 30 minutes or less.

F M Ire

Speedier still is to use bigger drones or even choppers to reach some optimal launch point mid-air from where the smaller drones get dropped off. After the delivery is done, the smaller drones rejoin the bigger drone mid-air.
You can design a whole tree of these split-points mid-air, haw haw. Kinda like the Russian Matroska dolls one inside another. The bigger drone will drop off the smaller drone and so on until the leaf drones deliver the actual product.

Frank A NYC

FAA pressure and trying to reduce the stigma of drones. Many Americans hear drones and immediately think NSA spying or CIA Reapers.

Ouriel Ohayon

Om i have a simple take: he needed to have a massive “Free ad campaign” for CyberMonday…and by announcing something cool he got the WHOLE WEB to talk about Amazon for free. JUST IN TIME for Cybermonday

Well done amazon. You just save 20m USD in marketing spend

Arthur Simiyu

To shift attention from the bad press they are getting about the working conditions in their centers to this new “cool” thing. Drones!

Jacob E. Dawson

Maybe because today is Cyber Monday and Amazon’s brand name is now flying around the net more than ever?

Om Malik

Excellent point Jacob, but still it was on 60 minutes so I am assuming it is not just a cheap PR stunt and instead is a bigger PR stunt ;-)

Rachel

Delivery within 30 minutes? Not unless they produce about as many drones as there are orders made in a 30 minute window (I’m guessing millions) and have a way of recharging them all simultaneously. Or unless they invent a way of carrying more parcels at once and hope that there are a lot of customers on a 30 minutes flight route/window.

Also, I suspect these would be fairly susceptible to being brought down, either maliciously or simply by colliding with undetected/unmapped hazards such as cables, foliage, birds, etc. Seems like no more than a marketing exercise to me. It’s certainly not a practical way to deliver packages.

Rags Srinivasan

Because it is a head fake. He wants competition ti focus on the “how” and not the real customer need he is addressing – “delivering packages within 30 minute window”. That is a real bigger threat to retailers. If the competition focused only on drones they will end up focusing on how to design best quarter inch drill while amazon is really delivering them the best quarter inch holes.

Om Malik

I agree with you in theory on how they are targeting the 30-minute or less as yardstick for delivery of goods and retailers need to be worried. I think it makes sense for them to be aiming towards that goal.

Saurabh

Amazon’s free cash-flow is on the decline since last many quarters. I think this is a way to signal to investors that it is a company of the future and that they can ignore short term numbers.

Comments are closed.