How cheap drones are upending the big business of defence

September 6, 2026 — 5:00am

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The lower price and high impact of drone warfare is pushing down the financial costs of aerial bombardment, forcing a rethink from militaries and governments.

At the same time, the blistering pace of drone innovation is also disrupting traditional defence manufacturing by lowering the barriers and opening the door to favour smaller, more nimble companies.

Drones have come to define the Ukraine-Russia conflict and their effects are playing out daily in the Middle East. Salvos of drones are overwhelming conventional air defence systems; swarms of cheap drones are being shot down with expensive Western-made missiles; and inexpensive small drones are taking on tanks.

In the process, long-standing practices of how defence gear is designed, built, and sold are being repriced at a lower cost, much in the way computers, once the province of university labs in the 1960s, became ubiquitous PCs in the 1990s, then laptops, and iPhones.

In the defence world, this has created a gap in capabilities between drone-savvy militaries and ones relying on high-tech, expensive weapons of the past.

The US, for instance, has been hamstrung in defending its Middle East bases because it doesn’t have enough drone interceptors.

Nations quickly building stocks of drones to meet government-directed goals are practicing what Ukrainian analyst Lesia Bidochko describes as “drone Keynesianism”.

Economist John Maynard Keynes believed governments could solve economic problems through massive, sustained spending on production. For companies, the goal shifts from marketing complex and elegant systems to fielding drone units that can deliver on a battlefield.

Today, for example, Ukraine incentivises 500 small suppliers to work fast and respond to near-daily changes on the battlefield.

The government creates the market, allowing small companies to focus on rapid innovation while literally “under fire”. The US is........

© The Sydney Morning Herald