Sonos is in a rough patch with its consumer hardware business. Demand is nowhere near the same level as it was a few years ago, and CEO Patrick Spence has used the word “challenging” more than once when discussing the company’s recent financial quarters. Today’s earningswhose revenue decreased 5.5 percent year over year, are another example.
“While it was a challenging year in the categories we play, the strength of the Sonos brand and product portfolio allowed us to maintain a strong position in market share,” Spence said in the Sonos press release.
But Spence and the Sonos team predict big things ahead in 2024. Namely, some kind of major new product is on the roadmap for late next year and Sonos seems very excited.
“This is the beginning of a multi-year product cycle in which we hope to reap the rewards of our R&D investments,” Spence said. “This cycle begins with our entry into a new multi-billion dollar category in the second half of the year that will complement our current offering, delight customers and drive immediate revenue.”
During the Sonos earnings call, Spence shared a few more insights. “In total, we expect to generate more than $100 million from new product introductions this year (fiscal 2024), and this exciting new product will account for a large portion of this revenue in the second half,” he said.
Could he be talking about the long-rumored Sonos headphones? The headphone and earphone market is huge, and if Sonos is looking for a revenue generator, that’s certainly one way to get there. The mention of R&D could also mean that we will finally see the fruits of Sonos acquisition of Mayhta startup that came up with an innovative new approach to speaker transducers to produce massive sound from small components.
About a year ago today, Spence announced that Sonos would be entering four new product categories in the coming years. The first of them, Sonos Pro, ended up focusing commercially. It’s a subscription offering for businesses looking for easy control over the music played in their space. That kind of thing is important for Sonos’ long-term strategy, but it’s also a little boring for regular consumers like you and me. Hopefully we can have something a little more intriguing next year. According to Spence’s provocation, I certainly am.
The timing is starting to look right for headphones. Between LE Audio and upcoming headphones that will use Wi-Fi to compensate for Bluetooth’s weaknesses, Sonos could finally see an opportunity to do something unique compared to other tech players, perhaps with smart handover with speakers, sound bars, and company’s portable devices. As far as new home audio products go, I wouldn’t expect a new Sonos Arc anytime soon, but the Sonos Five is a great candidate for an overhaul in the next two years now that the company is so invested in spatial audio.