The good news for the downsized workers: maybe they can join Amazon. The retailer is hiring at the unit that oversees the company’s smart wireless speaker, a potential Sonos challenger. The Amazon Echo is one of the web store’s most popular electronics items.
On Wednesday, Sonos CEO John MacFarlane said in a blog post that he was laying off an undisclosed number of employees. Typical for CEOs who must proffer bad news, he led off with several sunny notes about management’s prescient decision to bet on streaming music, and the company’s ability to innovate. He wrote that the music industry is in transition but that his team has “a good idea of how this will evolve over time.”
Sonos is at least partly in the trouble it’s in because management failed to anticipate where the sector was going. MacFarlane all but acknowledges that when he said he plans to steer the company towards voice-controlled speakers, a segment that Amazon staked out first and at this early stage enjoys a wide lead in.
Amazon’s voice-controlled Echo speaker is the third-most popular electronics item on the retail site, and has generated many positive reviews from tech outlets as well as consumers. As it happens, on the same day that Sonos announced layoffs, The New York Times wrote that “the Echo has morphed from a gimmicky experiment into a device that brims with profound possibility.”
“The longer I use it,” wrote the Times’ Farhad Manjoo, “the more regularly it inspires the same sense of promise I felt when I used the first iPhone.”
Certainly, Sonos’ gear is no stranger to positive reviews. Anyone I’ve ever known that has purchased the networked sound systems or wireless speakers has raved. Despite what MacFarlane says, however, since the company was founded in 2002, it hasn’t shown much ability to seize opportunities or evolve its business. Why did Sonos largely sit out the headphone craze sparked by Dr. Dre and Beats? Say what you want about Beats’ mediocre products, which included home speakers, it ushered in a lucrative period for music gear.
In MacFarlane’s defense, the entire digital-music space is a hollowed-out shell. The industry still reels from Napster and the digital revolution. Few music-related services, including Spotify and Pandora, generate profits or significant revenue. Millennials are loathe to pay in any form for tunes. For big players like Apple and Google, songs have largely become a loss leader. Nobody knows how the sector will look once the dust settles. Nobody.
Be that as it may, in the near future the market doesn’t look very friendly to Sonos. The Santa Barbara, Calif.-based company must now compete in voice command against Amazon, a retailing and electronics colossus. And don’t forget Google’s Chromecast Audio.
If Sonos can innovate, it might be wise to show those skills soon.