Sonos – Sounds of sameness pt. II

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I do not see the boldness required to save Sonos 

• Sonos has announced a change in leadership with its 14 year veteran CEO / founder John MacFarlane handing over the reigns to President Patrick Spence who joined Sonos in 2012 as COO.
• Patrick Spence was previously with BlackBerry in a sales and marketing role.
• Although Sonos reportedly has had a reasonable end to 2016, it remains in a strategic quandary that I think will take a very bold move to fix.
• The problem is essentially that as it now supports the major music streaming services, it has relinquished a large part of its long term differentiation.
• Sonos’ strategy to date has been to lock its users into its ecosystem and only allowing them to use popular services such as Spotify, Amazon and so on via its own app.
• The idea was to create a compelling user experience such that users would choose a Sonos even if something of equivalent quality was available at the same price point.
• Unfortunately, this is where it has all come unstuck as Sonos’ ecosystem delivers a frustrating, buggy and substandard user experience that I think users would not use if they had a choice.
• By enabling both Spotify Connect and Amazon Echo, Sonos has removed the requirement for users to use its software which I think is a sign that it is giving up on trying to create user preference around an ecosystem.
• Because Amazon Echo and Spotify Connect are keen to work with any speaker on the market, Sonos’ differentiation now becomes: audio quality, design and its multi-room function.
• Hence, I see Sonos’ only chance is to either
  • First: invest in cool new hardware features and stay ahead of its competition to maintain its price premium or
  • Second: to go for volume and gain scale advantages by significantly outselling its rivals.
• Given Sonos’ current position, I think that both of these options will require a bold strategic move from Sonos that would probably have most chance of success if led by an outsider.
• Hence, I fear that Sonos’ outlook remains rather bleak and hence it may end up being acquired.
• I see it making a good tuck-in acquisition for any company trying to create a cross device ecosystem as its brand is very well known.
• I see Samsung, Apple, Sony and Amazon all as potential acquirers.