How Drones Are Changing the Business of War

Summary

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WSJ What’s News – How Drones Are Changing the Business of War

Date: October 5, 2025
Host: Alex Osola (B)
Guest: Alistair Macdonald, Ukraine and Defense Industry Reporter (C)

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Episode Overview

This episode investigates the rapidly evolving role of drones in modern warfare, focusing on their transformation from hobbyist gadgets to key implements reshaping military tactics and the defense industry. Recent drone incursions across Europe and landmark deals between Ukraine and the U.S. frame an exploration of who makes drones, how they’re used, methods of defense, and the unprecedented business boom—and risks—surrounding drone technology.

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Key Discussion Points & Insights

1. The Escalation and Evolution of Drone Warfare

• Drones’ omnipresence: Recently, drone sightings have led to airport closures in major European cities, and NATO is accelerating its anti-drone efforts ([00:18]).
• Drones have evolved beyond surveillance; now, they’re used for logistics, attacks (including "loitering munitions" that wait and strike), and swarming tactics ([02:20]).
• Quote: "It's a huge, now broad spectrum of drone usage. That's the big difference." — Alistair Macdonald ([02:56])

2. The New Capabilities: Scale and Cost

• Mass production as a game-changer: Ukraine produced 2 million drones in the past year, demonstrating a shift to cheap, high-volume production ([03:08]).
• The West lags behind in producing drones at comparable volume and price—a growing strategic concern ([03:08]).

3. Defending Against Drones: A Difficult and Expensive Challenge

• Defense against drones involves both traditional weaponry—like the German-made Gepard anti-aircraft guns—and more innovative tactics such as electronic warfare (signals jamming and spoofing) ([03:55]).
• Old equipment (even WWI-era machine guns) is repurposed alongside electronic countermeasures to bring down drones ([03:55]).
• Quote: "Some of their most effective anti-drone capabilities is something called the Gepard... just like these massive machine guns basically..." — Alistair Macdonald ([03:59])

4. Who Makes the Drones? The Emergence of New and Old Players

• Ukraine is now a leading innovator, especially in AI-powered drone swarms (company spotlight: Swarma) ([05:05]).
• U.S. produces high-end drones, e.g., the Reaper, and has new entrants like Anduril and AeroVironment, with major primes (Lockheed Martin, BAE Systems) entering the landscape ([05:22]).
• China dominates cheap, commercial-grade manufacturing—a backbone for global drone parts ([05:57]).
• Russia, after a late start, has caught up via domestic innovation and Iranian Shahed drones ([06:18]).
• Israel is an early innovator and producer of "loitering munitions" ([06:33]).
• The market is crowded and competitive, suggesting a future "Darwinian battle" amongst manufacturers ([07:08]).

5. The Shahed Drone: A Symbol of Cheap, Mass-Produced Warfare

• The Iranian-made Shahed is triangular, minimalistic, and designed for easy, rapid production. It’s widely copied or emulated globally ([07:22]).
• Strategic function: Used to waste enemy defenses and probe air defense systems before deploying more expensive munitions ([07:56]).
• Quote: "It's designed to be cheap and it's designed to be easy to make." — Alistair Macdonald ([07:25])

6. Why Is the West Lagging Behind?

• High production costs in Western countries make mass deployment of expendable drones economically unviable. Western drones can cost around a million dollars each ([09:14]).
• Quote: "It just costs a lot more to make things in the West...high-end drones for a million a shot. These are expendable weapons." — Alistair Macdonald ([09:16])
• The constant need to adapt drone tech due to advances in electronic warfare means development never stands still ([09:24]).

7. The Role of AI and Swarming Technology

• AI as an operational enabler: AI facilitates effective drone swarms, allowing them to coordinate tasks and compensate for losses or communication disruptions ([09:45]).
• AI is essential to resist electronic jamming; drones can continue missions autonomously if disconnected ([09:54]).
• Human-in-the-loop requirement in Western militaries means humans must authorize lethal action—even if drones coordinate themselves ([10:25]).
• Quote: "The idea of AI swarming technology is you don’t [need 40 people to control 40 drones]. They coordinate amongst themselves." — Alistair Macdonald ([10:19])

8. Drones and the Future of War

• Changing the battlefield: Drones bring precision and affordability together, combining capabilities that missiles (precision) and artillery (mass) previously provided separately ([11:04]).
• The Russian invasion of Ukraine is presented as a case study: despite conventional military power, Russia was thwarted by a nimble, drone-centric Ukrainian defense ([11:21]).
• Armor and vehicles are rarely seen on the front; they’re quickly targeted and destroyed by drones ([11:44]).
• The terrain matters: Ukraine’s open, flat landscape is ideal for drones; effects might differ in forested or maritime regions ([12:07]).
• Regardless of geography, drones are now an indispensable part of any military strategy ([12:20]).
• Quote: "Everybody knows drones are here to stay and that they will have this massive impact on the battlefield. There's nowhere to hide on a battlefield now." — Alistair Macdonald ([11:05])

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Memorable Quotes & Moments

• On the new drone paradigm, Ukraine as innovator:
  "The Ukrainian industry produced 2 million drones last year and some of these are relatively cheaply produced." — Alistair Macdonald ([03:11])

• On defense difficulties:
  "They use ancient machine guns, some of which date back to the first World War..." ([04:09])

• On AI and Western ethics:
  "Western rules of engagement is that you always need a human being in the kill chain. It’s not like some sort of robot wars..." ([10:23])

• On the psychological and tactical impact:
  "You can be on or near the front line and you will see no armor...as soon as they show up, a drone will hit them." ([11:44])

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Important Timestamps

• 00:18 — Introduction: Europe’s recent drone incursions and setting the stage
• 02:20 — Evolution and diversity of drone usage in Ukraine/Russia
• 03:08 — Mass production and cost revolution
• 03:55 — Anti-drone tactics and technological arms race
• 05:05 — Global drone manufacturers and the crowded market
• 07:22 — The Shahed drone as a battlefield staple
• 09:14 — Western struggle with cost and pace of development
• 09:45 — The critical emerging role of AI and swarming technology
• 11:04 — Drones’ transformative effects on tactics and military balance
• 12:20 — Why drones are indispensable to future conflicts

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Conclusion

This episode offers an incisive look at how drones are transforming warfare and the defense industry—from the mass production lines in Ukraine, to the economic and ethical dilemmas in the West, to the indelible imprint made on the battlefields of Ukraine and beyond. As Alistair Macdonald makes clear, drones are now central to military strategy, innovation is accelerating, and the business—and threat—of drones will only grow from here.

Transcript

[A]

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[B]

Hey, what's News Listeners? It's Sunday, October 5th. I'm Alex Osola for the Wall Street Journal. This is what's NEW Sunday, the show where we tackle the big questions about the biggest stories in the news by reaching out to our colleagues across the newsroom to help explain what's happening in our world. On today's show, as recent drone incursions in Europe have shown, drone technology has evolved a lot as it's been used by both sides on the battlefields of Ukraine. Today we'll dig into how they got there, what drones can do and how they're shaping the business of war. Last month, a series of drone incursions rattled Europe. First it was Poland where NATO planes shot down about 20 Russian drones. Then airports in Copenhagen and Oslo closed for hours after several large drones were spotted in their airspace. And on Friday, we told you about another airport closure, this time in Munich after several drone sightings there. NATO is accelerating efforts to respond to these kinds of threats which have become much more prominent in the past few years. Today, drones are way more than hobbyist toys for taking pictures. They can surveil, carry weapons and swarm. They can even be armed with a bomb and then lie in wait before crashing into something. Those are called loitering munitions. The west has been falling behind in producing these kinds of drones. But just this past week, news broke about a potential landmark deal that would see Ukraine share its battle tested drone technology with the US Today we're taking a step back from the front lines to talk about the business of drones, who makes them, who buys them and the financial trade offs in defending against them. Joining me today is Alastair McDonald who covers Ukraine and the defense industry for the Journal. Alistair, drones are not a new technology, but they've reached this new level for defense purposes in Ukraine. How has that been playing out there and what are they being used for?

[C]

Well, drones are being used on land, they're being used on sea, they are being used in the air in particular. And that's what people tend to associate drones with, it's aerial usage, both in commercial land hobbyists and in defense sectors. Drones have been used in warfare on a relatively significant manner really for the last 20 years, if not more, that the Ukrainians and Also, the Russians, in fairness, have pushed the envelope. You've got long range drones, you've got short range drones, you've got drones that use for logistics, you've got drones that use used just for attack, you've got drones that are just used for reconnaissance. It's a huge, now broad spectrum of drone usage. That's the big difference.

[B]

So on a technical level then, do they have abilities now that even a decade ago they didn't have?

[C]

The big difference is that in the Ukraine war, it's quantity, it's volume and it's the ability to produce these very cheaply. The Ukrainian industry produced 2 million drones last year and some of these are relatively cheaply produced. And so one of the key things now, which the west is starting to wake up to, is just that, yes, we can produce drones, but can we produce them en masse and can we produce them cheaply?

[B]

I definitely want to talk more about the production of drones and who's doing it in just a moment, but I still want to understand like where we are in terms of drone use. So it sounds like if you wanted to attack a particular target or troops, you could do that via drones. You could get a lot of information. How do you actually defend against a drone?

[C]

Well, it's increasingly difficult. There are many ways, some very expensive. The Ukrainians say that one of their most effective anti drone capabilities is something called the Gepard which the Germans gave them, which is just like these massive machine guns basically that just shoot a large amount of bullets, large caliber bullets out at drones very quickly. They use ancient machine guns, some of which date back to the first World War, heavy machine guns. They use old Soviet anti aircraft weapons and they have these groups that used to go around effectively with Kashnikovs just shooting down shaheeds. They're slightly less effective now, but that's certainly been the case. And then there is of course electronic warfare, which is essentially signals jamming or signal spoofing. And that's a huge portion of how the Russians and the Ukrainians down each other's drones. The Russians have a particular expertise in this.

[B]

Lots going on there. But now I wanted to get a little bit into who is making these drones. So like I mentioned, the Trump administration is working on a deal to gain access to Ukraine's drone technology. So are they the leaders in this industry right now? Who are the big players here?

[C]

The Ukrainians have proved very good at what I was talking about earlier, which is mass producing cheap drones. For instance, there's a company, it's named Swarma that now uses AI to have drones communicating with each other. It's quite fascinating. If one drone is running out of energy, it literally communicates that to the other drones and they reshuffle each one's tasks and they communicate when they're going to strike where the target is, although it's obviously been programmed before what the target is. The Americans have some very high end long distance drones like the Reaper drone for instance. Going further down the chain there's a lot of new entrants, Anduril more famously including a so called loitering munition. Then you have a company called Air Environment and then you have all the big primes trying to get in the act. By primes I mean the likes of Lockheed Martin, these huge great defence companies that are now trying to produce their own drones in marine drones. Hii a very old American company, the company produces the aircraft carriers and nuclear submarines for instance. They have done for a while and are continuing to do a lot of underwater drones. In Europe you have a British company called BAE Systems that's very good on heavy logistics drones. So these carry very heavy weight around, something that helicopters would have once done. You have your European equivalent of Anduril, you have several of them. For instance, a German company called Helsing China has proven very good at making very cheap drones very fast. And everybody's drone industry is even now still quite dependent on the Chinese. The commercial drone industry is huge. The Russians were late into the game but they've caught up. They have particularly their own surveillance drones, but they've also using Iran Shaheed and adopting it to their own usage. And that's a major component of their warfare. Basically the Israelis, they have their own drone industry, they have loitering munitions. In fact they invented one of the first loitering munitions and various surveillance drones. So they're in there as well. But the thing with drones is there's just a plethora of new names coming out. It's quite a crowded field and eventually that will have to fit in. It will be a sort of Darwinian battle of the best ones will emerge.

[B]

I want to dig in a bit more about the Shahid drone you mentioned because it's one we hear about a lot. How has it become so common on the battlefield?

[C]

So the Shaheed is emblematic of you need to have a drone that's cheap to make and you can produce very quickly. And so the design is such that it's a triangular delta as they call it, shape within the wings. It doesn't need many supports and you can mould it out of one basically. And it's a proportion engine which is much cheaper. It's designed to be cheap and it's designed to be easy to make. The us, France, Britain, certainly China, everybody is trying to develop a Shaheed basically which is this sort of long range, cheap vehicle that they can churn out and therefore it's used to waste enemy defenses, distract the enemy and also protest their air defenses. And then you can send in more high end things such as ballistic missiles, cruise missiles into the mix to more targeted way of attacking.

[B]

Coming up, we look at the future of drones and why the west is lagging behind. That's after the break.

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[B]

So you started to say earlier that the west is a bit more behind in the sort of like cheap long range drone industry, is that right?

[C]

Yeah, that's very much so. It just costs a lot more to make things in the west and you can look at some of the prices of some of the military drones in the west and you can see that high end drones for a million a shot. These are expendable weapons. So it better be a high profile target for you to be spending a million on it. And the other thing of course is drone technology moves on all the time. And one of the reasons is this risk from jamming electronic warfare. You have to continually update your drone before the break.

[B]

You mentioned the idea of a swarm where drones communicate with each other using AI. Where does AI fit in?

[C]

So AI is going to become an increasingly important component of drones. And there's two main reasons, one of which is again, electronic warfare. If you can disconnect the drone off from its operator, it's absolutely useless. But what AI can do is it can continue the journey even though it's been disconnected. It can do this, for instance, by referring to a essentially maps that have been downloaded within it that follow the contours of the countryside as it goes. And it can also do it in terms of communicating with different drones. So if you have A swarm of drones, say 40 drones at the moment. Do you need 40 people to operate those drones? It's very difficult to coordinate. But the idea of AI swarming technology is you don't. They coordinate amongst themselves. But the trouble is that Western rules of engagement is that you always need a human being in the kill chain. So it's not like some sort of robot wars where these guys go off and then they just pick their own targets and shoot. Somebody has to have picked out that target and often has to have the sort of final say as, yes, go for it, to the drone.

[B]

What does this look like for the future of war? I mean, it sounds like countries or groups with less manpower can have a more substantial presence with some of the sort of technological abilities that you're talking about. But is it inevitable that drones become the future of war? Is that what we're gonna see, these robot wars?

[C]

Everybody knows drones are here to stay and that they will have this massive impact on the battlefield. There's nowhere to hide on a battlefield now, just because you have these surveillance drones everywhere. In the past, you've had really expensive missiles for precision, and then you've had artillery for what you call mass, cheap mass. And what drones can do is combine them both. They can be precise, and because you can make them quite cheaply, you can use a lot of them. And that's also changed things around. Look at what happened to the Russians. Russia was considered one of the great military powers and it was humbled by Ukraine, one of the poorest countries in Europe. And a lot of that, not everything, of course, but a lot of that has been through drones. You can see it, what's happening on the battlefield. I go to the front quite a bit and you can be on or near the front line and you will see no armor. You don't see tanks, you don't see infantry, fighting vehicles. And the reason why is that as soon as they show up, a drone will hit them. It means that you have to move forward, often on foot, and they move forward on things like buggies and bikes. It's completely changed it. There is an argument to say that Ukraine is different. Ukraine has ideally suited the drones. It's very flat, there's not many trees. It's perfect for drone warfare. And it's also a very static front line. It doesn't move much now. Would that be the same in Asia? It would be a completely different type of war. It would be very marine based. There's obviously a lot of islands there. There's a lot more forest there and vegetation in general, it would be very different. But even given that argument, nobody thinks that drones won't play a massive part in warfare from now on.

[B]

That was Wall Street Journal reporter Alistair Macdonald. Thanks so much, Alastair.

[C]

Thanks very much. Thanks for having me.

[B]

And that's it for what's new Sunday for October 5th. Today's show is produced by Zoe Culkin with deputy editor Chris Since Lee. I'm Alex Osola, and we'll be back tomorrow morning with a brand new show. Until then, thanks for listening.

[E]

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