Sonos Say Sales Doubled as Home Sound-System Market Grew

Sonos Inc., the maker of multiroom speaker systems, said revenue almost doubled to $535 million in 2013 as consumers increasingly used wireless technology with music services like Pandora in the home.

The closely held maker of high-fidelity speakers and streaming software is disclosing its revenue for the first time. Sonos is attempting to expand from its base of music enthusiasts to grab a bigger share of the $10 billion home-audio market, said Tom Cullen, a company co-founder, in an interview. The Santa Barbara, California-based company, which raised $40 million in 2012, is operating at break-even, he said.

“We’ve set ourselves up as the best-kept secret in electronics, but the scale of everything we’re trying to achieve really requires us to do things differently,” Cullen said.

Sonos equipment lets users stream music from computers, mobile devices and online services such as those from Pandora Media Inc. (P), Spotify Ltd. and Beats Music LLC. Its speakers can be configured to play the same music or different tunes through applications downloaded for mobile devices using Apple Inc. and Google Android software, or PCs and Macs.

Nine years after the company pioneered the whole-home wireless stereo market, it faces competition as bigger consumer electronics makers build products for the fastest-growing category in home audio.

Samsung Electronics Co. (005930), based in Suwon, South Korea, in October introduced the Shape music system, while closely held Bose Corp. developed its SoundTouch speakers. Bang & Olufsen A/S (BO) has released new wireless systems developed under an audio standard known as WiSA, in which Sharp Corp. (6753) and Pioneer Electronics Co. also are members.

Patent Trove

Sonos is relying on patents it developed to serve as a barrier to others attempting to muscle in. While the competition “should only improve everyone’s experience with music at home,” Sonos holds 200 patents in the field that rivals should be aware of, Craig Shelburne, the company’s general counsel, said today in a blog posting.

The company also plans to reveal pending patent applications before the U.S. Patent and Trade Office so “companies can innovate around them,” Cullen said.

Sonos, which initially cost about $1,000 for an entry bundle, now offers modular options starting at $199 per speaker.

WiFi speakers accounted for 17 percent of global wireless speaker shipments in 2013, and Sonos was the “undisputed leader,” said Jack Wetherill, an analyst with Futuresource Consulting. The wireless category also includes transmission via Bluetooth and Apple Inc. (AAPL)’s AirPlay.

The company is creating soundbars and working with third parties to create an expanded range of products in the home theater and home automation categories, Cullen said.

To contact the reporter on this story: Cliff Edwards in San Francisco at cedwards28@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net James Callan

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