Unfortunately, the competitive landscape has meant that Sonos has had to make the tough decision to lay off a number of employees, the first time it has done so since the 2008 financial crisis. That’s despite the company still remaining profitable.
It made the difficult decision to do that in order to double down its focus on certain areas of its business. This means Sonos is about to target the music streaming industry heavily and it is even contemplating adding voice control to its speakers – likely to combat the growing dominance of Amazon’s Echo.
Sonos’ CEO John MacFarlane announced the lay-offs in a post on the company’s blog, emphasising that anyone leaving the company had been “important” in getting it to the current stage it is now and that they will continue to be looked after.
The CEO admitted that the company had been partially blind-sided by the rise of music streaming however. In fact, in its first 10 years Sonos has predominantly focused on music lovers who had ripped their collections and wanted to stream those collections to multiple rooms – now the company is instead going to focus on customers who use music streaming services.
Apple Music, Spotify, Napster, Google Play Music, Rhapsody and many others are already available on Sonos, but the company is not stopping there. In fact, John states that the path forward for the music industry is “crystal clear”.
Noticing that change in the industry users should expect to see a drastically different Sonos in years to come. John says: “We’re doubling down on our long-held conviction that streaming music is the dominant form of consumption now and in the future.”
Due to the drastic change in strategy, the company made the difficult decision to lay off staff to not only bring on new people who can enhance Sonos’ knowledge in this sector, but also to heavily invest resources in streaming music.
The second focus for Sonos in the future is voice recognition. While it’s clear that Sonos wants to take on the Amazon Echo, John praises the Amazon team for their work on Alexa claiming that the voice assistant will impact “how we navigate music, weather, and many, many other things.”
Despite that John adds that the Sonos team is exploring “how best to bring voice-enabled music experiences into the home”. He did not however rule out using Amazon’s Alexa API in the future.
So what caused this sudden change in strategy? Well in the US the market has seen a considerable slow down since the launch of the Amazon Echo. John himself admits in an interview with Billboard that everything non-Echo shrank slightly year-over-year in calendar Q4 last year.
Sonos is not afraid of its change in strategy however, the company is still growing year-on-year and it hopes that by investing significant resources in these two new developments that it can continue the growth.