COMMENT:Sonos Is Unravelling, Is It Time To Move Back To A Distribution Model
Sonos is unravelling, stupid marketing decisions, their lack of innovative audio technology and a panic obsession to compete directly with retailers is finally taking a toll with the Company laying off another bunch of staff overnight.
The big question now is how long can the US sound Company afford to still operate as a subsidiary in Australia and is it time for them to go back to a distributor model as sales ain’t what they were when former distributor Niv Novack exited the business and Sonos set up their own operation.
Questions are also being asked as to whether Apple is a contender to buy the business.
Why should they because Apple has no technology worth buying.
The only thing valuable at Sonos is their customer base data and the metadata that Sonos collects every day when one of their systems is switched on and a customer accesses music content.
Arrogant, dictatorial Sonos management is half the problem, this is the same management team that openly went out of their way to try and screw their own customers by trying to switch them off from the Sonos OS forcing them to buy a new Sonos piece of gear.
It backfired dramatically and if I was running the Company the first people to be sacked are the people who approved such a stupid marketing ploy.
Sonos says the layoffs are meant to reduce operating expenses and “preserve liquidity.” It directly blames the COVID-19 pandemic, but I think there were big problems in the Company prior to COVID-19 as I have alerted to in past stories.
The Company claim they will also close its NYC storefront and six satellite offices.
Executives like CEO Patrick Spence will take a 20% pay-cut, with Spence’s starting in July.
Other executives will start their 20% pay-cut in September, through the end of 2020.
At this stage it’s not known whether any cuts will be made in Australia.
I believe Sonos is on a slow spiral to the bottom because competitors such as Amazon, Bowers & Wilkins, Denon and Google are delivering superior networked speakers.
Apple is also tipped to be coming back into the networked speaker market later this year with a new HomePod, so why would they buy Sonos as their database of customers is significantly bigger than Sonos and they already known which of their customers already own a Sonos system because they had to download an app from the Apple Store, the same applies to Google and their Play Store.
The concept of Apple buying home speaker maker is not new.
According to analyst Andrew Left, Sonos’ valuation is low enough to attract an acquisition bid.
While Apple’s coffers are jam-packed to the tune of A$120 Billion they are a smart Company and they have quickly realised that Sonos has no technology advantage and their foundation OS is almost obsolete especially as consumers are moving to voice activation.
Sonos is suffering from cash flow issues and falling sales.
Currently Apple has 2.8% share of the networked speaker market with their HomePod and for Apple this is low.
One option open to Apple is to launch a Beats range of networked speakers. Apple paid $3 Billion to buy this Company in 2014 and eats is associated with sound and they already have a global base of customers.
As for buying Sonos the Company is tired, selling old technology, they have also alienated retailers by tipping millions into selling direct even to the point of approaching customers days after they have purchased a speaker at a retailer to buy a second one 20% cheaper from Sonos so that users can get stereo sound.