The digital transformation has introduced High Definition (HD) video into our everyday lives and HD video’s importance continues to rise. From action sports, to unmanned aerial vehicle (drone) camera shots, to rear view car cameras, HD video allows users to capture high quality images from previously unimagined angles, and harness that footage for a variety of purposes. Behind many of these systems’ HD cameras are processing chips developed by the Santa Clara, California based company Ambarella. As the demand for HD video products continues to rise, specifically video captured by drones, Ambarella is well positioned to benefit as the premier supplier of these processing chips.
Ambarella’s business model has established an economic moat surrounding the supply of HD processing chips. The company stands far and away ahead of its competition, namely Intel and Qualcomm, in terms of video processing quality, power, and compression. Ambarella cites its competitive edge stemming from the fact that it was the first company to identify and capture this niche HD camera processing chip market with quality, dependable products. Most of its competitors are trying to convert cell phone chip or computer chip technology to meet this HD camera need.  Its operating model allows Ambarella to offer 18 variations of chips for clients, and each chip is able to be customized to nearly 30 specifications. The customization allows the chips’ price point to meet the budget of the client, dependent mostly on the ultimate product destination for the particular chip. 
The action sports camera company GoPro exemplifies Ambarella’s value proposition to the consumer. Depending on which GoPro model the chips will be used for, GoPro specifies different quality parameters for Ambarella’s chips. The rise in popularity for GoPro cameras over the past 10 years has fueled the demand for Ambarella chips, however, the growth prospects for Ambarella continues to evolve and improve for the company beyond GoPro’s market. 
One avenue for strong growth lies in the drone camera market. The uses of HD cameras on drones continue to increase, and Ambarella has established a strong customer base with the camera providers who equip the drones. Uses for drones include agricultural surveillance flights to monitor crop growth, security surveillance flights, and land surveys in difficult to reach geographic areas. Movie producers have also use HD equipped drones in areas that are inaccessible by helicopters for filming. The volume of HD equipped drones is expected to increase dramatically in the near future, as the price for consumer drones is set to decrease. The margins on drone HD processing chips have been described by Ambarella as “healthy” and will continue to benefit from the increased in drone revenues.
Ambarella is also optimistic about its future position in the HD video in-car market. HD video will continue to be utilized within cars for safety features, such as rear view and all view cameras, as well as aid in the development of self-driving cars. Ambarella has invested heavily in HD video processing specifically for the car industry and seeks to be the first and market leader in future car HD technology. The company has positioned itself so that the heavy investment in R&D will allow it to maintain its edge over current and future competitors. The timeline to recognize dependable revenue from this investment may still be 3-5 years away, but Ambarella is confident that it will have the technology available at the time to provide the finest chips for the assignment.  (665 words)
 Unknow, (2015, 26 Sep). Welcome to the Drone Age. The Economist. Retrieved from http://www.economist.com/news/science-and-technology/21666118-miniature-pilotless-aircraft-are-verge-becoming-commonplace-welcome