Google Inc (GOOGL), Amazon.com, Inc. (AMZN): Can Commercial Drone Delivery Be a Reality?

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Google Inc (NASDAQ:GOOGL) entered the ‘drone’ space officially last week, when it announced its ‘Project Wings’. Amazon.com, Inc. (NASDAQ:AMZN) was the first tech major to enter this space when late last year it showcased its own experimental delivery service. Even though drones seems to be the flavor of the season for the tech majors, but the real question is if they are just a passing fad or will they prove to be of use in the near future? New York Times recently published an article on this and also shared some key insights into the world of drones.

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The article pointed out a lot of obstacles in making drone deliver a reality, the foremost among them is, can drones deliver goods in a big city? All experiments of drone delivery until now have been conducted in rural hinterlands with sparse population and perhaps no skyscrapers. It is easy to navigate a drone or an unmanned flying object in a clear field but a metropolis is a different ball game, altogether.

Another major consideration is cost, if it would be feasible to deliver simple goods like books, shoes and daily necessities via drones? As a rule of thumb, any machine that can fly is costly, which makes the whole exercise of delivering something via air a costly endeavor. Indeed, Google Inc (NASDAQ:GOOGL) and Amazon.com, Inc. (NASDAQ:AMZN) have a lot of money; but that money can be used only till an extent, drone technology must also be economical so that it can be used for delivery purposes.

Although Amazon.com, Inc. (NASDAQ:AMZN) hasn’t shared the finer detail of its drone experiments, Google Inc (NASDAQ:GOOGL) has revealed that it’s going to spend better part of next year in improving the navigation capabilities of its drones and expects that within a decade people will be able to use it.

As of June 30, 2014, Boykin Curry‘s Eagle Capital Management owns over 790,000 shares in Google Inc (NASDAQ:GOOGL) and Ken Fisher‘s Fisher Asset Management owns over 2.4 million shares in Amazon.com, Inc. (NASDAQ:AMZN).

Disclosure: None

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