Sonos is moving fast to cut costs, dump questionable management, with speculation mounting that the Company who has already hived off their custom install distribution to Westan in Australia is now looking to move to a totally new distribution model in Australia ,with the downsizing of their local office and a move to all stock being supplied via one distributor.
It also appears that global expansion has been put on hold, as new interim CEO Tom Conrad moves to get his US operation under control and back on track.
We already know that Sonos executives have been talking to several distributors in Australia prior to the recent upheaval.
After dumping former CEO Patrick Spence this week, who when hired eight years ago had no experience running an audio or technology business, along with other senior executives in product development and marketing, Conrad is also reviewing where costs can be cut with a shocker last quarter result set to be announced shortly.
Spence who having worked at Research In Motion as a sales rep previously flogging the ill-fated Blackberry smartphone, appeared to be totally out of control as the problems at the US audio Company mounted.
The last straw for the Sonos board was the roll out of an app that appears to have not been tested properly and when uploaded by millions of Sonos customers, caused all sorts of problems for customers, including the crashing of Sonos sound systems.
What followed was a massive decline in sales and customer satisfaction with consumers failing to buy the new Sonos Arc headphones that the app was specifically designed for.
Spence should have been dumped five years ago before the Company went public, instead the Sonos board is now wearing a problem of their own making with some industry executives now questioning whether the brand will ever recover.
The Spence appointed management team, is also being dumped after they failed, they failed recognize that the real problem wasn’t just how bad the app was but the fact that someone thought releasing it was a good idea in the first place.
It’s almost as though the company misunderstood what it was that its customers actually cared about when the app went pear shaped.
Sonos removed features from the app that customers actually liked.
It said updating the app was necessary in order to continue to deliver new features in the future, but the result was that it broke many features for current users.
The Verge claimed this week that ‘There’s a fairly simple principle of product design that if you have to spend a year fixing a product because it made the experience worse for your users, you should have never released it in the first place.
The reality is that any CEO with good industry knowledge would have known that.
Questions are also being asked as to whether Australian Phillipa Thomas the former Sonos PR Manager Australia, and now Head of Communication & Advocacy, Global Growth Markets will also survive after Chief commercial officer Deirdre Findlay became a victim of the restructure.
Findlay “oversees all marketing, revenue, and customer experience organizations at Sonos.
She was responsible for integrated brand strategy, geographic expansion strategies, and all go to market executions.
Observers claim that the company still has a long way to go to earn back customer trust. The app launch was so destructive to the company’s brand that it’ll take a lot more than a few sackings and the downsizing of the business to resurrect a broken brand.
Sonos shares are continuing to fall with the stock down 2.5% to $13.94 for the year the stock is down 11.2%.
At the start of COVID in 2021 the stock was trading at $43.41.
Back in September as the app drama was unfolding Spence, sold 45,000 Sonos shares a move that at the time sparked interest among investors and analysts alike, as insider selling can often provide valuable insights into a company’s prospects.
Research shows that during the past year, Spence sold a total of 45,000 shares and purchased 0 shares.
A day after Sonos announced a CEO transition, the company flicked Chief product officer Maxime Bouvat-Merlin.
Some employees claim that Bouvat-Merlin shares a significant amount of blame for the brand damage at Sonos and that he failed to alert the board to the extent of the problems in a product he had been responsible for.
He is believed to be the executive who released the ill-fated app before it was ready for customers.
There have been reports that top executives including Spence, ignored warnings from engineers and app testers that the new software wasn’t up to par ahead of its May rollout.
Those alarms didn’t stop it from shipping resulting in the problems that Sonos face today.
