One of the first categories to get “connected” in the Internet of things (IoT) was audio. Sonos launched its first networked speaker in January 2004 and consumers have been untethered from their music source since. Other companies like Bose have gotten in on the act of late as well, releasing their own wireless speaker systems. But the big gripe with all these current platforms is that they are walled gardens. That is, they don’t play nicely with other speakers, only integrate with select music sources and services, and require proprietary apps to navigate. That’s about to change.
Beep, a new audio hardware and software startup founded by former Google hardware engineers Daniel Conrad and Shawn Lewis, aims to shake up the connected speaker market. The pair today introduced a companion controller that can hook into any speaker or amplifier that has an auxiliary or optical input and instantly make that speaker wifi enabled. The small wedge shaped device is beautifully designed in both gunmetal and copper such that it may be displayed, rather than hidden, and featured a large volume dial, as well as play, pause, and skip track inputs.
Beep, Sonos, and Bose are part of a wave of companies tapping increasing interest in the internet of things. Google recently dropped $3.2 billion for connected-home product lab Nest, while companies from Apple, to Samsung, to ADT are looking to get in on the hardware trend. The basic premise of IoT involves connecting an ever-growing number of everyday objects to the internet. It’s not a new idea, but with the prices of key hardware components dropping precipitously, network speeds and coverage rising rapidly, and consumer appetite for connected devices at an all-time high, things are really picking up steam.
The primary advantage of Beep over existing solutions from Sonos and Bose is that it works with a user’s existing speaker setup (inputs permitting). That means if you’ve shelled out major cash for a premium sound system, you don’t need to abandon this investment just to control your music from a mobile device. The system also allows the user to interface with streaming services like Pandora and iTunes Radio through their native apps, rather than through a poorly approximated third party app. (I’m looking at you Sonos.)
To offer an analogy, if Sonos is iOS with its my-way-or-the-highway ideology, Beep is the open and inclusive Android platform. This comes as little surprise as Conrad worked on the team that built Google’s first Nexus Android smartphone.
Beep will be available for $99 through a 30-day pre-sale campaign powered by CrowdHoster, and will sell for $149 per unit thereafter, initially via the company’s website. At launch, the company will run a promotional campaign giving Beep owners who share their purchases on Facebook or Twitter a $10 refund for every friend that subsequently orders a Beep.
Users will need to buy one controller for each speaker or speaker system. That means that outfitting a room or an entire house could get pretty costly. But the prices are comparable to proprietary connected speaker competitors, especially given the speaker flexibility that Beep allows. Beep also enables wireless, multi-room audio, meaning it could save homeowners thousands on the cost of audio installers wiring their house to achieve a similar effect.
Longer term, Conrad and Lewis aim to evolve Beep into a hybrid consumer and enterprise business. While they intend to continue selling standalone Beep controllers for the foreseeable future, the bigger plan is to wholesale components and software to existing speaker manufacturers who lack the capability of designing such systems themselves. Imagine one day buying speakers marketed as having “Beep inside.” The company has already begun engaging in these enterprise sales conversations, Conrad says.
While designing a wireless audio platform may seem trivial, it’s anything but. As much should be obvious based on the limited number of companies who have brought a product to market now 10 years after Sonos’ launch. If competition comes from anywhere, Beep’s founders expect it will more likely be from chip manufacturers like Qualcomm and Broadcom than from dedicated audio companies.
“‘Sonos envy’ is a common term in the electronics industry,” Lewis says, referring to the company high margins and sex appeal of its brand. “The challenge for speaker companies is the software piece,” Conrad adds. “They’re good at audio, but they don’t want to build and maintain integrations and worry about distributing sound wirelessly from room to room.”
The decision to start with the consumer market and then evolve toward enterprise is a highly calculated one, according to Beep’s founders. Nonetheless, dividing focus in this way is a risky move that even Beeps investors have questioned at times.
“We want to get the product right,” Conrad says. “There are so many shitty streaming solutions out there. We want people to have a Beep in their hands, know that it’s reliable, and to know that this is something that you can set up and your grandma can use.”
Circling back to the Nexus analogy, Conrad adds that while Google didn’t sell tens of millions of units of that device, it was considered wildly successful internally as it helped ecosystem partners understand what the ideal form of an Android device could look like. The hope is that the Beep controller can serve a similar function.
“There’s a reason we’re not shipping a speaker,” Lewis says.
Beep raised a bit more than $1 million in Seed funding from Dolby Laboratories board member David Dolby, reddit co-founder Alexis Ohanian, Y Combinator partner Garry Tan, and Zappos CEO and VegasTechFund partner Tony Hsieh*.
Beep is in the very early stages of this process and has a lot to prove. Not only must the company prove that it’s built a quality hardware and software product, but it also must demonstrate that it can manufacture it at scale and reach consumers through effective sales and marketing. We’ve seen time and time again just how many things have to go right for hardware companies to succeed. Everyone from upstarts like Pebble to experienced teams like Jawbone and Apple has encountered very public and costly manufacturing issues.
Conrad and Lewis are no rookies to the hardware game, so they get this as well as anyone. The beep product is a late-stage prototype today, but they continue to “beef up the internals” in preparation for final production and general availability.
“We’re trying to take a very long view of this market,” Conrad says. “I think that the Nest valuation [of $3.2 billion] is one of those insane numbers you can’t wrap your mind around today, but will look back and think it was nothing.”
The internet of things always seems like it is just around the corner. For now, connected refrigerators and thermostats are still the domain of early adopters. Music may be the most universal and mainstream application of all for this technology. If Beep can establish itself as the Android, or the market share leader within entire category, it has potential to become a very valuable company. That’s a crown that Sonos wears today. In the end, though, it will likely come down to a battle between open and closed platform philosophies. You know on which side these two Xooglers are placing their bets.
(*Disclosuer: Tony Hsieh is an investor in PandoDaily.)