Sonos goes small, stays premium, and is still flourishing

Back in 2008 at the beginning of the economic meltdown, I sat down with Sonos CEO John MacFarlane and asked him about how he felt his company might do in a downturn. It was a natural question to ask a company that had always positioned itself as a premium brand with fairly high entry price points.

MacFarlane didn’t hesitate to suggest that they’d be just fine, in large part because he felt they had the financial wherewithal to withstand any downturn.  He also felt because they were leaders in the space from an innovation perspective, that they would continue to attract consumers because others like Sony and Bose weren’t innovating like they were.

Over five years later, it looks like MacFarlane was right, and the company has grown from its early roots as a cool connected music system startup to a blue chip consumer audio brand and the leader in this new generation of home audio systems.

Of course, that doesn’t mean that Sonos can afford to sit on its laurels. A new generation of Bluetooth connected speakers such as the Jambox has made its way to market, and now Sonos can compete in this space with its new $200 Play:1.

Early reviews are strong; TheVerge had an early stab at reviewing the Play:1 and gave it rave reviews compared to the Jambox. Janko had a chance to talk to MacFarlane, who told him, smirk in place, “We will do some damage in the $200 category.”

The Play:1 follows last year’s intro of the Sonos Soundbar, and, as suggested by MacFarlane, the company also has some new innovative technology improvements on the way such as “content tossing” from apps to their devices.

So, will the company’s new box eat into the low-end Bluetooth speaker market? To a degree, but I don’t think they care to go too hard after that space, which would likely mean surrendering more margin. There’s still huge growth potential in their current market, especially since they’ve lowered the entry point, and I think they’ll want to focus on maintaining their premium brand they’ve earned over the past five years and more.

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Wolf

Michael Wolf

Chief Analyst NextMarket Insights

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