Yahoo Finance GoPro grounds drones business blaming tough rules in US and Europe
Hi-tech camera firm GoPro is quitting the drone market saying politicians and lawyers had made it impossible for it to be successful.
The company said hundreds of jobs would be lost as it blamed “a hostile regulatory environment in Europe and the United States” for putting paid to its Karma drone venture.
Air safety officials in the US, UK and continental Europe have raised concerns about drone strikes on commercial aircraft.
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Meanwhile, privacy campaigners and police forces have issued warnings about people using drones to spy on neighbours or other members of the public.
In a trading statement, GoPro said its Karma drone would be the last one it would make. Once current stocks had been sold, that would be that.
The Karma drone was first unveiled in late 2016, but at $799 struggled to compete on both price and reliability with its rivals, such as DJI.
All Karma units were recalled in November that year after a fault was found that caused the machine to lose power.
In its earnings report, the company said that although the Karma “reached the #2 market position in its price band in 2017, the product faces margin challenges in an extremely competitive aerial market”.
Together with the tough legal positions in the US and Europe, said GoPro, “these factors make the aerial market untenable”.
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As a result, GoPro founder and CEO Nicholas Woodman will reduce his 2018 salary to $1 and the company will slash at least 254 jobs to fewer than 1,000 worldwide.
It hopes the moves will save $80m (£59m), and it now expects fourth-quarter revenue of $340m (£250m), a hefty downgrade from its previous forecast of $470m.
GoPro, whose cameras and drones are mostly used by sports fans and travel enthusiasts, also cut the price of its Hero6 cameras to $399 from $499.
It expects a restructuring charge of $23 million to $33 million, including about $13 million to $18 million for the job cuts, in the first quarter.
GoPro said it would continue to provide technical and customer support for those who had already boughts a Karma drone.
In the UK, the Civil Aviation Authority estimated 1.5 million drones would be sold in the run-up to Christmas, many of them presents for teenagers.
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The government has since proposed licensing for all drone operators from 2018. A bill making it mandatory for drone owners to register for a national database is expected to be published within months.
Police have also warned about misusing drones to invade people’s privacy.
By the end of 2017, it is estimated there will be more than two million drones in use in the US.
As with the UK, US president Donald Trump has reinstated moves to get all private drone operators to register with the Federal Aviation Authority in an effort to police just who is flying them and where.
