Facing challenges, audio firm Sonos claims to be making progress. But is the public tuning in?
Sonos has been in turmoil lately, with a botched app update in May 2024 causing significant customer outrage and overshadowing the launch of its first-ever headphones. This blunder cost the company an estimated $100 million, as revealed by the CFO late last year. The company's shares took a nosedive as a result.
Chief executive Patrick Spence stepped down in January, and Sonos let go of 200 employees, or 12% of its workforce, in February. Interim CEO Tom Conrad acknowledged the difficulty faced by the company, stating, "As a longtime passionate customer myself, I know the magic of Sonos, but I also know the extreme disappointment of the company’s recent app challenges."
To regroup, the company is reorganizing its product teams around topics like hardware, software, quality, design, and operations instead of individual product categories. Industry analyst Brent Thill of Jefferies believes that, with its solid products, Sonos needs to act swiftly to regain its lost consumer enthusiasm.
The app update debacle had severe consequences for Sonos. Customers took to social media and Reddit to vent their frustration when simple user features were eliminated and new glitches like volume control issues and inability to set alarms arose. Sonos' slow response and inadequate fixes further added to the frustration.
The financial toll was significant, with the company estimating that the app launch challenges negatively impacted their revenue by at least $100 million. The company's annual revenue declined over 8% from fiscal year 2023 to 2024, dropping from $1.66 billion to $1.52 billion. This downward trend has made investors wary, as Sonos' stock has plummeted around 22% year-over-year.
Before making waves in consumer tech in the 2000s, Sonos was an innovative trailblazer in the field of wireless speakers. Launching its first product in 2005, the company developed a devoted customer base due to its exceptional customer experience, both in terms of packaging and sleek hardware. However, in recent years, the company seems to have lost its touch with this experience, leading to a significant drop in customer satisfaction.
Time is of the essence for Sonos in 2025. With back-to-back quarterly net losses and stagnant stock performance, interim CEO Conrad is focusing on "getting Sonos back on track," by emphasizing performance and reliability, usability, and design, and exploring new experiences.
Fortunately, Sonos has recently seen high demand for its Arc Ultra soundbar, taking up the largest market share in the US home theater segment. If the company can successfully regain its lost customer trust and focus on delivering an exceptional user experience, then it has a chance to rise from the ashes.
In an attempt to regain customer trust, Sonos is restructuring its product teams, focusing on topics like hardware, software, quality, design, and operations. This tech company, currently in financial turmoil due to the app update debacle, needs to act swiftly, as suggested by industry analyst Brent Thill, to revitalize its business and regain lost consumer enthusiasm.
