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Sonos Omits Reference to Apple & Amazon, Doubles Down on Direct-to-Consumer
Audio products maker signals rising tension with big tech distribution partners.
February 25, 2021
Sonos (SONOS), a designer and manufacturer of high end multi-room audio products, warns investors its relationship with distribution partners— namely Apple (AAPL) and Amazon (AMZN)— could easily sour. In its third quarter 2020 10-Q, Sonos flagged the risk associated with its frenemy relationships:

“If our distribution partners, such as Amazon and Apple, continue to compete with us more directly in the future, they would be able to market and promote their products more prominently than they market and promote our products, and could refuse to promote or offer our products for sale alongside their own, or at all, in distribution channels.”

In its latest 10-Q (fourth quarter 2020), Sonos mentions both Amazon and Apple one less time than the prior quarter. It also omitted the above warning and added new language suggesting it’s now competing more directly with— and potentially irritating— its big tech partners:

“The expansion of our direct-to-consumer channel could alienate some of our channel partners and cause a reduction in product sales from these partners. Channel partners may perceive themselves to be at a disadvantage based on the direct-to-consumer sales offered through our website.”

Sonos further warns its direct-to-consumer (DTC) initiative may result in conflicts that cause partners to divert resources away from the promotion and sale of its products. Sonos also details the consequences of crossing Apple and Google (GOOGL):

“ the extent we use our mobile app to increase traffic to our website and increase direct-to-consumer sales, we will rely on application marketplaces such as the Apple App Store and Google Play to drive downloads of our mobile app. Apple and Google, both of which sell products that compete with ours, may choose to use their marketplaces to promote their competing products over our products or may make access to our mobile app more difficult. Any of these situations could adversely impact our business and results of operations.”
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