Sonos Acquires Snips for $37.5 Million
Sonos announced yesterday that it has acquired Snips for $37.5 million. The purchase price is below the valuation of $50 million that was assigned to the company during its last funding in June 2017 according to Pitchbook data. However, it does exceed the reported $18.5 million invested in the company to date.
Patrick Spence, Sonos CEO, said in a shareholder letter that the acquisition was motivated by improving the voice user experience on its devices but that it does not plan to compete directly with “big tech” and their “ask anything voice services” but instead will focus on device control features and music.
“Today we announced the acquisition of Snips SAS for approximately $37.5 million in cash. This is our first acquisition as a public company and we are pleased to bring on a talented team that will support what we do best — making the Sonos experience better for our customers. Snips is an AI voice platform for connected devices that provides private-by-design voice technology, and the Snips team will bring expertise and strategic IP that will make the voice experience on Sonos even better. We do not plan to replicate the big tech ‘ask anything voice services’ but expect this acquisition will add to our customers’ ease of use and control as we continue to differentiate an end-to-end Sonos experience for our customers. This tailored experience aligns with external research showing that the most popular use for voice assistants is to access music.”
Spence also pointed out that Snips had a complementary patent portfolio which added to the value of the acquisition. Snips cites a number of partners and customers on its website and in previous announcements including NXP, BNP Paribas, Legrand, and Nippon Express. It is not clear if Sonos will continue to support these arrangements.
Privacy Frist, On-Device Performance
Snips was co-founded by Rand Hindi (a Voicebot Top 44 Leaders in Voice honoree in the Visionary category), Michael Fester, and Maël Primet in 2013. The three founders hold PhDs and the company debuted publicly in 2015 after graduating from the 500 Startups accelerator along with $6 million in funding led by Eniac Ventures. After another investment of $1.7 million from undisclosed investors, the company made a bigger splash in June 2017 with a $13.45 million fundraise led by Korelya Capital and MAIF Avenir. Last year, Snips failed to complete a planned initial coin offering (ICO) which Hindi chronicled in a Medium post.
However, the company did maintain a high profile as a solution for on-device voice control that did not require cloud access. This approach created contrast with Amazon and Google where every voice assistant conversation is processed in the cloud and raises the risk of private user information becoming exposed.
Snips accomplished its local voice navigation by depl0ying small speech dictionaries on the devices themselves. This meant the Snips natural language processing (NLP) couldn’t understand all speech or even a wide variety of speech but rather specialized in a narrow dictionary where it could excel. For example, voice controls for a coffee maker or for more complex tasks like music search were enabled as demonstrated in the videos below.
It is interesting in the music assistant demo above, the setup includes a Sonos Connect device and many of Snips’ marketing images included Sonos speakers. Beyond this, the privacy angle could have public relations currency for Sonos. Privacy considerations have risen in media coverage this year due to revelations that contractors listen to some voice assistant user transcripts as part of quality control and improvement processes. This shined a spotlight on the potential for exposure of private user data.
Neither Amazon nor Google are likely to change their cloud-centered practices. Google did offer an impressive demonstration of Google Assistant operating on a smartphone without cloud connectivity at its annual developer conference this year. However, the focus was the improvement in speed. So many Google services that make the Assistant useful are cloud-based so detaching from the cloud undermines the core value proposition. This is also true for Amazon Alexa. Plus, if you want to get beyond small dictionaries to be one of those “ask anything voice services” that Spence refers to, the cloud is still required.
Sonos sells devices that are intended to make it easy to play music. They are no beholden to cloud services nor do users expect them. A Snips-enabled Sonos smart speaker could eventually become the preferred option for consumers that want voice control but are wary of always-listening assistants connected to the cloud. If that helps Sonos sell more devices and create clearer differentiation from products like Echo Studio and Google Home Max, then the acquisition could pay for itself quickly.