Drone Aviation seeks foothold in military market

March 22, 2016

By Marjorie Censer

With a new Defense Department contract in hand, Drone Aviation executives say they see their tactical aerostat increasingly gaining traction.

The company announced earlier this month it won a contract worth more than $780,000 to provide its second-generation Winch Aerostat Small Platform -- or WASP, which is a mobile aerostat system that can be used to provide surveillance and communication.

To win more military work despite tight budgets, Drone Aviation has sought to participate in demonstrations, trying to break into the market by proving the system's worth to soldiers.

In an interview with Inside Defense last week, Dan Erdberg, Drone Aviation's president, said the company is convinced there's a need for this technology -- but has to get it in the hands of the right people.

"We just decided our best strategy was, we're going to support the warfighter," he said. "The further it gets . . . the use cases get proven, and it just continues to really excel at what it's designed to do. Eventually, people will see it."

Jay Nussbaum, who was named chairman of Drone Aviation's board last year and has invested his own money in the company, echoed Erdberg's support for this approach.

"When you're a startup -- and . . . we are beyond a startup, but not too far beyond -- you just need to get a foothold and a reputation," he told Inside Defense. "There can be no better reputation than to help the warfighter."

In 2014, BAE Systems bought two WASP systems, which were then delivered to Army Space and Missile Defense Command and participated in the service's Network Integration Evaluation, once as a system under evaluation and another time as a baseline system. Last year, the Army-owned WASPs participated in the DOD Enterprise Challenge, meant to consider how technologies could "collect, send and retrieve data from the field," according to a company filing this month with the Securities and Exchange Commission.

Also last year, the WASP systems went back to NIE and are slated for future exercises this year, according to the filing.

The company's system can fit in a trailer, which can be attached to a humvee or pickup truck, and can stay in the air for weeks. It can be used to extend an aerial communications network and to provide persistent video surveillance.

"It's small enough to where you don't have to have 30 guys running it," Erdberg said.

Now, Drone Aviation's executives are seeking to work with partners to help move the technology to the next level.

The company last year formed a working group with an L-3 Communications division to jointly market an upgraded WASP integrated with L-3 technology, according to the SEC filing. The filing also notes that Drone Aviation has a three-year "sales, marketing and integration" partnership with L-3.

Nussbaum said he's focused on ensuring the aerostat does more than simply collect information. He's in talks with a data analytics company to try to integrate the analysis of the information gathered.

"I don't want to just be selling hardware," he said. "I want to sell it as an information machine."

Additionally, Nussbaum said the company is hiring a larger sales staff, particularly seeking those with an expertise in the Pentagon.

Even so, the company acknowledges it faces a competitive environment.

In this month's SEC filing, Drone Aviation said it expects to go head to head with both "mom and pop" companies as well as major contractors, including Raytheon and Lockheed Martin.

"Most of these organizations and many of our other competitors have greater financial, technical, manufacturing, marketing and sales resources and capabilities than we do," the document adds. "We anticipate increasing competition as a result of defense industry consolidation, which has enabled companies to enhance their competitive position and ability to compete against us."

Last year, Drone Aviation reported a loss of nearly $9 million.

Nussbaum said he is hoping to at least break even this year. "I think the time is right for us . . . [to] really begin to build an audience and a following," he said.

Though Erdberg acknowledged the system has applications for the commercial market, he said Drone Aviation is primarily focused on the military and homeland security.

"I think the real customer is the United States government," he added. "We believe in what we've heard from working directly [and] being out there in the field with soldiers. . . . That makes you want to get this in their hands."