For decades, military technology advancement was largely defined by increasingly sophisticated platforms: stealth aircraft, precision-guided missiles, advanced surveillance systems, and highly integrated defence networks. However, a new factor is becoming equally important in modern defence planning: affordability.
Two recent conflicts, the ongoing US–Iran conflict and the war between Ukraine and Russia, have highlighted how inexpensive unmanned aerial vehicles (UAVs) can influence military operations and challenge traditional assumptions about the cost of warfare. While high-end defence systems remain essential, the growing use of low-cost drones has demonstrated that relatively simple platforms, when deployed at scale, can create significant operational impact. This has accelerated a broader shift already underway across the defence sector. Governments and military organisations are increasingly looking beyond a small number of expensive, highly advanced systems and investing in large fleets of affordable, adaptable, and rapidly deployable drones.
The key question shaping future procurement strategies is no longer only how capable a drone is, but how quickly and cheaply it can be produced. In the light of this argument, this blog explores how the growing demand for low-cost drones is reshaping the defence technology landscape, driving innovations in mass production, artificial intelligence, modular design, and counter-drone systems.
If you want to read more about drones, please refer to our report, Unmanned Aquatic & Aerial Vehicles (Drones): A regulated industry with 100 million connected devices in 2035.
The growing demand for affordable drones is driven by a simple economic reality. Traditional military platforms often require years of development and billions of dollars in investment. In comparison, many small unmanned systems can be manufactured at a fraction of the cost while performing critical missions such as surveillance, reconnaissance, communications support, and precision strikes. For instance, Ukraine is focusing on producing drones using entirely locally made components, which gives the country an unrivalled ability to develop and mass produce drones. Furthermore, by building locally, it is undercutting Chinese makers as well.
The advantage of these systems is not necessarily that they outperform advanced aircraft or missiles individually. Instead, their strength comes from scale. A large number of low-cost drones can provide persistent intelligence gathering, test enemy defences, and create operational flexibility that would be difficult to achieve with a limited number of expensive platforms. Ukraine planned to acquire approximately 4.5 million FPV (first-person view) drones in 2025, following the purchase of 1.5+ million FPV drones in 2024, since the country is increasingly relying on cheaper and more effective alternatives to conventional artillery.
Besides, intercepting a low-cost drone with a highly expensive missile can create a significant cost imbalance and, therefore, defence organisations are increasingly exploring both cheaper interception technologies and more efficient ways of neutralising large numbers of unmanned systems. For example, Ukrainian drone maker SkyFall has supplied Shrike FPV drones, with Germany reportedly funding 50,000 units under a EUR90 million (USD103 million) contract. At roughly EUR1,800 (USD2050) per drone, the deal highlights the shift toward large-scale deployment of affordable systems over fewer high-cost platforms.
One of the biggest changes in the drone market is the growing importance of production capacity. The future of drones for use in warfare is unlikely to be driven only by technological breakthroughs; it will also depend on how quickly manufacturers can produce large numbers of reliable systems. Technologies such as additive manufacturing and digital engineering are further supporting this transition. Manufacturers can now prototype, test, and modify drone components faster than traditional manufacturing processes allow.
Modular architectures are also becoming increasingly important. Instead of designing separate platforms for every mission type, companies are developing flexible systems that can support different payloads, sensors, and software applications. A single drone platform may be adapted for surveillance, communications, electronic warfare, or logistics missions depending on operational needs. For example, Anduril states that its Ghost-X supports ‘modular multi-payload configurations’ and ‘field-swappable payload bays’ allowing the platform to continuously integrate new capabilities. These payload options include electro-optical and infrared sensors, laser target markers, and other mission-specific systems, allowing the same airframe to support different operational roles.
Artificial intelligence is expected to be one of the biggest drivers of the next phase of drone development. AI-powered systems can enable drones to identify objects, navigate challenging environments, optimise flight paths, and operate with reduced human intervention. This will result in reduced dependence on external communication links, so improving operational resilience, while onboard decision-making capabilities can make drones more effective in environments where connectivity is limited or disrupted.
AI is also expected to accelerate the development of drone swarms, where multiple systems can coordinate their activities and share information. Instead of relying on individual drones operated separately, future operations could involve groups of low-cost platforms working together to perform surveillance, mapping, or other missions. For manufacturers, this creates a significant opportunity. The value of a drone will increasingly depend not only on its physical components but also on the software, algorithms, and intelligence capabilities integrated into the platform. Some of these capabilities have already been realised. A leading example is Shield AI’s Hivemind platform, which provides a real-world example of this transition. The AI pilot system enables drones to perceive their surroundings, make navigation decisions, and complete missions without relying on constant human control or GPS connectivity.
The increasing adoption of inexpensive drones is also creating demand for a parallel market: counter-drone systems. This includes radar-based detection systems, electronic warfare tools, signal jamming solutions, directed-energy systems, and AI-powered identification platforms. This trend is creating opportunities for companies beyond traditional drone manufacturers, such as sensor companies, semiconductor suppliers, cybersecurity firms, and communications technology providers. A real-world example is RTX’s counter-drone technology portfolio, which combines radar, electronic warfare, and command-and-control systems to detect and neutralise small unmanned aerial systems. The company’s Coyote interceptor, developed by Raytheon, is specifically designed to defeat low-cost drones and has been used by the US military.
The growing demand for affordable drones represents a significant opportunity in the defence technology ecosystem, creating new avenues for drone manufacturers, component suppliers, AI companies, robotics firms, and advanced manufacturing providers. As governments focus on expanding unmanned capabilities, technologies such as batteries, processors, sensors, communication systems, and autonomous software are becoming increasingly important.
The future drone market will not be defined solely by the most advanced platforms, but by the ability to produce reliable systems at scale, adapt quickly to changing requirements, and integrate emerging technologies. While high-end military systems will continue to play a critical role, affordable drones will increasingly complement them, creating a more flexible and scalable unmanned systems landscape. Ultimately, the next phase of drone innovation will depend as much on manufacturing efficiency and adaptability as on technological sophistication.
