What Cracking Open a Sonos One Tells Us About the Sonos IPO
For eight years, a war has been raging among a number of unlikely players. This bloodless technology battle is turning out to be one of the fiercest and most expensive we’ve seen in decades. The prize is one of the most sought-after commodities in the world: access to tens of millions of homes. It all starts with a 100-year-old invention: speakers.
The reason this battle matters is that it reflects a huge change in consumer behavior. Until recently, there were very few pipes into the home: Telecom companies like Comcast and AT&T that provided a paid monthly service.
A few years ago, modern technology companies discovered how easily consumers could be convinced to allow much deeper access, without the cost of providing a paid service. Voice-controlled speakers from the likes of Amazon, Apple, and Google have struck a deep nerve with consumers, thanks to consumers’ frustration with tech-enabled devices that have too many apps, interfaces, buttons, and controls. The first big wave of these devices has been wildly commercially successful.
Hidden in plain sight is the roadmap for how this battle for consumers’ homes is likely to play out.
It is too early to tell if this tradeoff is a net positive for consumers, but it’s clearly a massive boon to technology companies’ bottom lines. Sonos, the first startup company to widely deploy this technology, is going public with a placeholder amount of $100M.
Despite all the analyst reports, market speculation, and journalists poring over the Sonos S-1 filing, I always find more truth about a company’s future buried in the plastic and the electronics that make up the products themselves. Hidden in plain sight is the roadmap for how this battle for consumers’ homes is likely to play out.
Two Categories and Two Teardowns
There are two distinct categories of players in the voice-controlled battle for the home. In the blue corner: big tech companies that want to gather more data about consumers to further their core business. In the red corner: more traditional speaker manufactures that need to add more intelligence, in order to keep up with consumer expectations. To really understand the players, we have to peek inside products from each. I’ve chosen the flagship products of the leading companies in each of these two camps: Amazon Echo Plus and Sonos One.
🎵Nothing compares to you
Even though just about every decision that was made about each of these products’ hardware was different, they use the same backend Alexa service (where most of the IP is) from Amazon. These two products are clearly targeted for the same consumers and represent “mid-level” smart speaker features.