Speaker maker Sonos is aiming to go public, filing an Initial Public Offering (IPO) in order to raise as much as $100M …

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The company has a lot of satisfied customers, noting in its filing that 61% of its customers own more than one Sonos product. Among those who initially bought a single speaker, they on average end up owning 2.4 products. Those who bought more than one speaker initially average 4.9 products.

However, the company has been hit by the HomePod launch – a product I considered to be a Sonos Play 5 killer – and is facing increasing competition from both Google and Amazon smart speakers. Variety notes that although its 2017 revenue climbed 10% to almost a billion dollars, the company made a net loss of $14.2M.

If Apple expands HomePod into a range of speakers at different price-points, that could be a particular threat as the two companies target a very similar demographic. Amazon and Google could also grow into greater threats if they offer smart speakers with better audio quality.

A legal obligation in an IPO filing is a frank statement of the potential downsides of investing in the company, and Sonos doesn’t pull any punches when it comes to competitive threats.

We also face intense competition in our markets, and we are 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. For example, 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. 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 […]

Our competition includes established, well-known sellers of speakers and home sound systems such as Bang & Olufsen, Bose, Samsung (and its subsidiaries Harman Kardon and JBL), Sony and Sound United (and its subsidiaries Denon and Polk), and developers of voice-enabled speakers and systems such as Amazon, Apple and Google. We could also face competition from new market entrants, some of whom might be current partners of ours.

Personally, I’m a big Sonos fan, and I’m not alone in that here at 9to5Mac. But a HomePod has replaced my bedroom Sonos Play 5, so those risks seem very real to me.

Photo: What Hifi?

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