2016 may have been the best year yet for drone sales — but the 2.5 million drones sold last year wasn’t enough to keep Parrot from announcing a cut of a third of the company’s drone division labor force. The French company announced yesterday that it would be laying off about 190 employees in the drone division after holiday sales missed their mark by about 15 percent.
The Washington Post says 2016 was a record year for drone sales, with about half, or nearly 1.2 million, of those sales coming during the holidays. But the growing market has been accompanied by falling prices and increased competition, and Parrot fell short of its goals to the tune of over $15 million in the fourth quarter.
The company’s drone division accounted for about 63 million dollars, with 11.6 million attributable to commercial drones and the remainder to consumer models.
While those numbers are only for the last quarter of the year, the company says the pattern shows that current market performance “would be insufficient to deliver profitable growth for this business over the medium and long term.”
To ensure long-term profitability, Parrot is adjusting its strategy. The company’s plan includes a reduction in the overall number of products while capitalizing on the expertise the company has developed for commercially-oriented quadcopters. About 290 staff members will be laid off out of the company’s 840 employees who are focused on drones. The company says 150 of those reductions will be from Parrot’s France-based locations with the rest being carried out in other nations.
While drones continue to soar in popularity, Parrot is likely having trouble competing with the Chinese manufacturer DJI. Since DJI owns all the factories it uses for production, as Recode points out, the company is able to sell its drones at a lower price. That edge was also what caused 3D Robotics to focus solely on drone software and stop manufacturing drones after DJI dropped its prices.
While commercial drones made up a smaller portion of Parrot’s sales in the fourth quarter, the company plans to focus on that market, where growth in applications such as aerial inspections have accelerated.