Sonos IPO: We're Still Waiting

I have a confession to make: I’m what you call an audiophile.

If the word is unfamiliar to you, I wouldn’t be too surprised. It only entered my vocabulary a few years back when I was searching for a good pair of headphones to use at work. Ask any of my colleagues, and they’ll attest to the fact that I’m almost always plugged in by the ears.

Thing is, I absolutely love music, and I get incredibly excited about high-quality sound reproduction. As it turns out, there are many others out there just like me.

In fact, I think almost anyone out there could be considered an audiophile to some extent — it’s just that not everyone knows it yet. All it takes is a few minutes with a pair of headphones of a high enough quality, though, and most people quickly realize what they’ve been missing.

Fortunately for all us audiophiles, we live in an age where headphones and speakers bump crystal-clear sound at volumes our parents and teachers once warned us about. Sure, we may be a little more prone to NIHL, but what good are our ears anyway if we never experience music to the fullest?

The point is, I have great respect for a good audio system and pair of speakers, as do many others out there. The only trick, of course, is finding something that doesn’t totally clean out your wallet.

Believe it or not, some audiophiles will drop thousands of dollars on a single pair of headphones or connector cables. AudioQuest, for instance, sells its Diamond RJ/E Ethernet cable for a mind-blowing $5,500.

Just to be clear, that’s for nothing more than a single cable!

Now, I’m not the kind of audiophile who’s that serious about sound reproduction, but I’m also not afraid to drop a pretty penny or two for a quality system.

When it comes to determining quality, audio systems these days aren’t just about clean, crisp sound anymore. Consumers don’t just want great hardware; they a want user-friendly music interface as well.

Consolidation is Key

Back in the day, your entire music collection was kept either in a box of records or a CD binder. Today, though, music seems to come from everywhere: Sirius, iTunes, Pandora, Spotify, personal hard drives, and even good old FM.

Simply put, the organization of music has become disjointed and confusing — so much so that interface and software have become equally important to consumers as audio-producing hardware.

The initial success of Apple is all the evidence you need to see how important clean consolidation of music is to the market.

Apple’s iPod was the first product in history that allowed users to cram all of their music into one little device that was easy to both understand and navigate. Consumers absolutely loved it, and Apple quickly became a household name.

Today, another young tech company is setting up to take advantage of our love for music and the need for both simplicity and organization. That company is Santa Barbara-based consumer electronics firm Sonos, which I’d like to tell you a little more about.

Sonos: The Next Big Tech IPO?

When it comes to home audio systems, Sonos is particularly unique. The company provides a combination of high-quality audio hardware with a clean user interface that consolidates music services such as Pandora, Spotify, Sirius, Beats Music, etc. all into one place.

Further, Sonos allows users to control groups of wireless speakers through virtually any modern electronic device. Desktops, notebooks, tablets, and mobile phones can all act as a remote.

The beauty of Sonos is that users have complete flexibility in how they set up and control their home audio.

If you live in a small apartment, for instance, you can purchase just one speaker and control it through your smartphone. If you live in a large house, you can purchase multiple speakers over time and designate each to a specific group: living room, patio, kitchen, etc. You can then control each speaker group from your nearest available device, whether that be a desktop computer or your tablet.

You can even set schedules for each speaker group. For instance, you can have your living room audio turn on right around the time you get home from work, or you can have your bedroom audio act as an alarm in the mornings.

Simply put, Sonos is the epitome of the connected home when it comes to audio. In fact, I’d go so far as to say it’s the most impressive smart home product on the market right now.

They say if you love the product, you’ll probably love the stock, which is why I’m just dying for Sonos to IPO. I recently began integrating my own home with the company’s products, and I can honestly say nothing else on the market comes close in terms of overall quality.

It’s not just my opinion that matters, though. One look at the Amazon reviews for Sonos’ products, and it’s clear users absolutely love what the company has to offer. In fact, I can’t find a single Sonos speaker rated under 4.5 stars.

In terms of scaling out, Sonos is positioned quite nicely to do so. The beauty in the company’s business model is that once you purchase a single Sonos speaker, you’re essentially committing to buying more if you plan to expand your audio system in the future.

Unlike conventional audio systems, where you can mix and match brands, each supplemental speaker you add to the system needs to come from Sonos. Other speakers are simply not set up to be compatible with the Sonos app. Fortunately for consumers, the company offers a family of speakers of all shapes and sizes.

More importantly, though, Sonos has the potential to be much more than just a home audio company. Just as Apple found its way into our pockets through music, Sonos has the opportunity to do the same, but into our (smart)homes instead.

Ultimately, the battle for the smart home will be for interface more than anything else. A smart home isn’t actually that smart unless user control is clean and consolidated.

More so than any other company so far, Sonos has demonstrated the ability to seamlessly integrate connected devices into the home. For now it’s just speakers, but tomorrow it could be home security, lighting, or temperature control as well.

For 2015, Sonos has targeted $1 billion in sales. If the company hits that mark, it will have nearly doubled its revenue for two years in a row.

Even more impressive, this would represent 16% of the wireless speaker market, already putting Sonos right at the heels of Bose, which currently controls 22%.

Many speculators are already banking on a Sonos IPO. The company has yet to announce any plans to file an S-1, but we wouldn’t be surprised to see one soon.

In any event, you can be confident Sonos will continue to grow as a household name and become a major player in the smart home market.

Until next time,

Jason Stutman

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