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Sonos Boss Quits After Failing To Respond To Voices

It’s been a top selling product at JB Hi Fi for over a decade, now the Sonos sound system is under pressure from a product that is not even launched in Australia.

Last night the CEO and co-founder of the popular sound John MacFarlane stepped down as CEO after leading the company since 2002.

Since its founding nearly 15 years ago, Sonos has amassed a devoted following among audio enthusiasts for its high-end, Wi-Fi-connected speakers.

Launched into specialist dealers in Australia the Sonos system almost never made it into JB Hi Fi stores after the then buyer rejected the system claiming that “it was too complicated” and that consumers would “struggle” with the networking element of the system.

It took then, CEO Terry Smart who after testing a Sonos system in his own home to immediately roll out the sound system in their stores.

It became of the retailers top grossing products.

But now Sonos endangered by a new breed of speakers powered by artificial intelligence assistants from the likes of Google and Amazon.

They’re starting to eat into the company’s bottom line.

MacFarlane said he’s leaving the company primarily to spend more time with his family.

“I need a balance in my life around my wife, family and parents,” said MacFarlane told FORBES. “Sonos has never been in a better spot. The world has made the transition to a streaming media ecosystem. It’s taken a while but it’s just now taking off. The future never looked brighter.”

Another problem facing Sonos is that their system is not capable of delivering 24bit audio. At CES brands such as Bluesound, Sony, Samsung and several leading sound Companies pushed their new 24-bit high res sound systems which are set to be popular in 2017.
But even with streaming music services taking off, Sonos faces a difficult future navigating the future of smart speakers.

Things started to change for Sonos with the release of the Amazon Echo in 2014. Amazon’s tube-shaped smart speaker was the first outlet for the company’s intelligent voice assistant, Alexa which has not been launched in a
Australia yet.

The device proved to be a surprise hit. It’s useful for playing music, setting timers and making shopping lists, and its functions continue to expand rapidly with more than 7,000 apps (or “Skills” as Amazon calls them).

At the end of last year, Amazon was estimated to have sold 5.1 million of its speakers, according to Consumer Intelligence Research Partners.
“I fell into that trap where I’ve been watching voice recognition for years,” MacFarlane told the New York Times. “I tried Echo in the beginning and wrote it off. I had too many distractions at that time. I wasn’t playing at the level I should have been playing at in all frankness.”

Google has come out with its own smart speaker, called Google Home, and Apple is testing out its own prototypes for a smart speaker powered by its assistant, Siri, that hasn’t yet been announced.

Sonos is trying to adapt to the proliferation of voice services taking off these days. In 2016, it announced an integration partnership with Amazon’s Alexa. Sometime this year, Sonos users will be able to control their Sonos speakers through an Alexa-powered device. As Sonos sees it, just as Sonos supports nearly every major music streaming services, it will also support every voice service.

“We’re playing in the big leagues now,” said Spence. “We’re partnering with these players and have some degree of competition with them.”

But the real value in this new category appears to be in who controls the voice services, not in selling the hardware. That’s why Amazon has been opening up to as many device makers as possible to integrate Alexa directly. At this year’s, Consumer Electronics Show, held last week, many manufacturers announced Alexa integrations in everything from washing machines to cars.

Sonos doesn’t disclose many details about its financials, but near the end of 2015 MacFarlane said the company was on track for $1 billion in sales and was profitable. And over the years the company has raised more than $300 million from investors. The company, however, missed sales projections in 2015, according to a former Sonos employee who spoke on the condition of anonymity. In 2016, the company announced it was laying off an undefined number of employees.

But Sonos is growing. Spence said the company grew 20% year-over-year in its most recent quarter. Spence also said the company’s investors are patient. “One of the amazing things John has done was orient investors towards the long term,” said Spence. “We’re focused now on filling millions of new homes with music.”

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