Sonos revealed new details of its delicate detente with competitor and partner Amazon as part the smart speaker maker’s filing for a $100 million IPO Friday.
In a filing with the U.S. Securities and Exchange Commission, Sonos, which has an office in Seattle, listed a number of risks associated with its partnership with Amazon that dates back to 2016. Sonos has produced two speakers with Amazon’s digital assistant Alexa built in: the $199 Sonos One and the $399 Sonos Beam smart TV sound bar.
Despite the Alexa integration, Amazon’s line of Echo smart speakers compete with Sonos offerings. Should Amazon see a threat from Sonos, the tech giant could disable Alexa on the Sonos One and Beam with little notice, leaving the speakers without voice capabilities, according to the filing.
Sonos is diversifying its voice offerings, promising integration with Google Assistant and Apple’s Siri this year. Sonos is hedging its bets by adding more digital assistants to its platform, making it less dependent on the Amazon partnership.
“If Amazon does not maintain the Alexa integration, if Amazon seeks to charge us for this integration, if we have not developed alternative partnerships for similar voice-enabled products or if we have not developed such products on our own, our sales may decline, our reputation may be harmed and our business and operating results may suffer,” according to the filing.
In 2017, Sonos reported revenue of $992.5 million, a 10 percent increase over the prior year, and a $14.2 million loss. In the six months ending in March, Sonos notched $655.7 million in revenue, an increase of 18 percent, or approximately $100 million over the same time a year ago.
Sonos said customers have registered 19 million products in approximately 6.9 million households globally. The company believes it is at the center of several “emerging trends driving the future of home entertainment,” such as the proliferation of streaming services and digital assistants. Sonos is betting on its ability to sell customers on higher quality speakers than the Google Home or Amazon Echo that cost more but work with a variety of digital assistants and streaming services.
Sonos established its Seattle presence in 2015 at the ultra-green Bullitt Center in the Capitol Hill neighborhood, starting with just 10 people. Sonos declined to comment for this story, but last year GeekWire reported that the company had about 70 people working out of the office with room for a total of 100.