Sonos aims at $100M IPO as it works to stem competition from Apple, Amazon & Google

AppleInsider

As expected, high-end wireless speaker maker Sonos has filed for an initial public offering on the Nasdaq, hoping to raise as much as $100 million as it tries to fend off new rivals such as Apple's HomePod, and Echo speakers by Amazon.

The company was explicit about the threat in its S-1 filing with the U.S. Securities and Exchange Commission, saying that it faces "intense competition" and is "dependent on a number of technology partners for the development of our products, some of which have developed or may develop and sell voice-enabled speaker products of their own."

While Sonos speakers support Apple Music, and will soon support AirPlay 2, the company specifically used the example of Amazon.

"Sonos One and Sonos Beam feature voice-control enablement powered by Amazon's Alexa technology while Amazon currently competes by offering speaker products of their own," the company wrote. "As we continue to execute on our product roadmap, our success in introducing voice-enabled speakers enabled with third-party technology, especially voice control, will increasingly depend on the willingness of our technology partners, many of which sell or may develop products that compete with ours, to continue to promote and enhance our products. These technology partners may cease doing business with us or disable the technology they provide our products for a variety of reasons, including to promote their products over our own."

Sonos announced plans to fire 96 people in May in order to improve profitability. The new S-1 filing indicates that in the fiscal year ending in March, revenue was up 10 percent to $992.5 million, but that still resulted in a net loss of $14.2 million. The company lost $38.2 million in 2016.

Apple's $349 HomePod is more limited in the services and functions it supports than the Sonos One or Beam, but can have appeal among iPhone and iPad owners hooked into Siri and/or HomeKit. The Google Home Max is more expensive at $399 but has its own unique benefits, such as a headphone jack and the powerful Google Assistant.

snookie

The Sonos One still only supports a small subset of Alexa commands.  
Certainly the HomePod sounds a lot  better and Siri has been Rome reliable operating smart devices.

anantksundaram

Putting themselves into play to be bought out -- at a higher-than private company price -- eventually.

edited July 2018

rotateleftbyte

The BOD are obviously planning their retirement packages. Rake in the $$$ with the IPO and exit stage left with the mulah.
We have seem all this many times before.

rayz2016

They don’t need an IPO, they need a plan, and then an explanation of how the IPO will help the plan. 

nunzy

If they think that a war chest of a hundred million dollars is enough to fight against Apple, they are crazy. Apple will spend five times as much as that to crush them.

Tim will see to it.

sflocal

What does an IPO do for companies like Sonos?  Sure it will raise capital, but if they think they have the chops to go up against established players like Apple, then they are ignorant about history.

They are just doing it to enrich themselves, take the money and run.  The company will eventually be sold off, or left to rot on the vine.  Rinse and repeat.

deminsd

sflocal said:

What does an IPO do for companies like Sonos?  Sure it will raise capital, but if they think they have the chops to go up against established players like Apple, then they are ignorant about history.

They are just doing it to enrich themselves, take the money and run.  The company will eventually be sold off, or left to rot on the vine.  Rinse and repeat.

Apple's HomePod hasn't exactly been a runaway success.  It supposedly sounds good, but so do Sonos speakers.  HomePod works with a very limited selection of music services, whereas Sonos supports almost everything.  Sonos has been producing excellent, well engineered products for a very long time.  I've been using them for more than 10 years.  Homepod has been out for a year.  How is Apple more "established" in the multi-room, home audio market?

In any case, they're a high-end company trying to compete with cheap Amazon and Google products.  I hope they figure it out because I'd hate to seem them fail.  Not sure if any of the previous commenters own or have every listened to Sonos products, but they are good at what they do.  

edited July 2018

polymnia

nunzy said:

If they think that a war chest of a hundred million dollars is enough to fight against Apple, they are crazy. Apple will spend five times as much as that to crush them.

Tim will see to it.

Just like Apple crushed all the WiFi router vendors?

i chose to reply to this comment, but I question the tone of AI’s coverage of Sonos and the commenters here.

Apppe and Sonos are continuously cast as enemies, with one needing to win and the other lose. I know people are fixated on winners and losers, I’m just not sure it applies on this case. 

bells

Apple isn’t actively targeting Sonos. It is entering the same space, but I doubt Tim is saying let’s crush Sonos.

Google and Amazon are the likely targets.

With that said, other than for some to get rich, what is the point of the IPO? How specifically will the raised money be used? Sonos points to some challenges, so what is it going to do to address those?

jcs2305

deminsd said:

sflocal said:

What does an IPO do for companies like Sonos?  Sure it will raise capital, but if they think they have the chops to go up against established players like Apple, then they are ignorant about history.

They are just doing it to enrich themselves, take the money and run.  The company will eventually be sold off, or left to rot on the vine.  Rinse and repeat.

Apple's HomePod hasn't exactly been a runaway success.  It supposedly sounds good, but so do Sonos speakers.  HomePod works with a very limited selection of music services, whereas Sonos supports almost everything.  Sonos has been producing excellent, well engineered products for a very long time.  I've been using them for more than 10 years.  Homepod has been out for a year.  How is Apple more "established" in the multi-room, home audio market?

In any case, they're a high-end company trying to compete with cheap Amazon and Google products.  I hope they figure it out because I'd hate to seem them fail.  Not sure if any of the previous commenters own or have every listened to Sonos products, but they are good at what they do.  

Why do you and others insist that HomePod doesn’t work with all music services?  You are wrong.... period. Does HomePod allow you to search other music service apps using Siri voice command.. no it does not, not yet anyway. 

Homepod can play any service via AirPlay from any service or app. 

You obviously are a Sonos fan and haven’t heard the HomePod. I think the fact that others are posting that the end is near for Sonos .. as becoming an IPO appears to be the start of the final cash grab,  and the selling off and end of Sonos as we know it. So maybe that has made you feel defensive, I am not sure. 

I personally own the HomePod and really like the sound. I was tired of Bluetooth and wanted a wifi speaker for my home.. I really liked the multi room potential with Sonos.  I was seriously considering the Play 3 or Play 5.  My only issue was no airplay. It was a deal breaker for me.

 I am not a person that cares for speaking to Siri to play music or for the weather or whatever else. I was replacing an older Bluetooth speaker that was played directly from the device. In my household and most friends use iPhone so I wasn’t worried about people being able to connect if they had an Android device. HomePod made sense, and I took a chance to see if Apple could produce a solid sounding reliable WiFi speaker with top notch sound. They absolutely delivered. 

notsofast

Apple isn't trying to crush Sonos,  they only recently signed a deal to carry their products on line and in their stores. What everyone understands though is now that Apple has shown its chops in creating as good or better home audio than the excellent Sonos speakers, the future of Sonos is predictable- a steady slide in profits and sales.  Their niche as THE high end audio wireless streaming speaker has been erased.  The Homepod is still rolling out, will be worldwide by this Christmas season, and with the A8 processor will only get better as far as both audio and smart speaker capability.  We will likely see a Homepod mini type speaker that will drive a spike into the heart of the Sonos 1 sales.   With the other threats it is facing, Sonos' owners best hope is clearly to go with an IPO to get enough cash to keep them in business and then hope for a buyout from Amazon or Google so they can cash out.

edited July 2018

seanismorris

If I remember correctly, Sonos recently changed their terms of service so the company became just another data grab company.

When the hardware & software isn’t good enough, collect and sell your customers data...

Obviously that didn’t work out.  They’re in a business that’s being squeezed by Amazon below and Apple above.  I doubt they make it.  I don’t know of any IP that makes they worth a buy-out either.

The IPO is about the original investors getting out.

polymnia

seanismorris said:

If I remember correctly, Sonos recently changed their terms of service so the company became just another data grab company.

When the hardware & software isn’t good enough, collect and sell your customers data...

Obviously that didn’t work out.  They’re in a business that’s being squeezed by Amazon below and Apple above.  I doubt they make it.  I don’t know of any IP that makes they worth a buy-out either.

The IPO is about the original investors getting out.

What data do they grab? The music you stream? I suppose they could record your voice. Are they really going to do that? I guess anything is possible, but I e heard nothing about them hoarding data. Have you got a link to share?

ipo’s are always about getting your cash out. Or putting your cash in. Apple had an ipo, once upon a time. It’s a bit ridiculous for a large company with lots of stakeholders to not have easily marketable shares. How do you attract the best talent without awards of shares for performance? That’s what Apple & everyone else does. 

People with an an axe to grind will certainty spin the ipo negatively, but it seems to me much more likely that this is just a normal business move. Nothing to see here. Move along, people. 

starco

Sonos produce some nifty and unique products that sound and work well.
In many ways they are the “Apple” of audio companies, focusing on simplicity, performance and design at a mid-range price point.
I believe that better integration with Apple products or even an outright buyout would benefit users, but I guess they’ve already tried that before announcing the IPO. 
Apple, for all the noise it’s making or it’s Beats acquisition is really not an audio company, Sonos is....