To Tom Conrad and the Sonos Board of Directors,
I’ve never done something like this before, but today I thought I’d write an open letter to you about why I think Sonos could and should be a $100B+ company.
It’s been 4 months since CEO Patrick Spence and CPO Maxime Bouvat-Merlin were terminated, with still no news about permanent replacements. There are rumors about Sonos being sold for parts to other larger tech and audio giants, a freefall in revenue and operating profit since the pandemic boom for home tech, and a large exodus of Sonos loyalist customers from the continuously failed attempts over the years to steer your technology toward cloud-based architecture – including the latest app drama. As the founder of a multi-room audio company that has looked up to Sonos throughout our journey, I’m as shocked as everyone else to see how suddenly Sonos has found itself in this existential crisis.
However, as sudden as it may seem from the outside, I think some of the underlying issues have been building up over time. If Sonos were truly living up to its potential, there may never even have been a need for me to start a company like Dio – instead, Sonos has been unable to break the $2B ceiling and has only had 3 profitable years ever, the last of which was 3 years ago. When I look at Sonos, I see a company with enormous potential that has been held back by its own faulty sense of self-identity.
A Faulty Sense of Self-Identity
What exactly do I mean by that? As I’ve watched Sonos build itself up over the years, I’ve seen the company fall into three traps:
1. The classic audio industry blind spot of believing that audio = music & home theater
2. Focusing on a high-paying, early adopter customer segment that accounts for only a tiny niche of the audio industry
3. Feeling a need to exercise and iterate on your existing IP rather than looking for the next big problems to solve
Let me take each of these one by one.
1 – Audio ≠ Music
Firstly, we live in a day and age where audio is no longer synonymous with music, home audio is no longer synonymous with home theater, and daily listeners are no longer synonymous with audiophiles. And yet, when I look at Sonos’ mission statement, I still see this glaring blind spot: “Sonos's mission is to fill every home with music, creating a seamless and immersive listening experience.” A seamless and immersive listening experience is a wonderful thing that is broadly applicable to the 96% of the population that listens to audio every single day, on average for over 100 minutes a day. However, filling every home with music – that’s not really something that every household cares to do, at least not on a daily or even weekly basis.
When you look at the data, daily audio listening has gone up nearly 17% over the last 5 years across the entire population, and yet music’s share of daily listening has dropped down 31% to the point where it is no longer the dominant activity. In its place, we’ve seen the rise of podcasts, audiobooks, social audio, and other content-driven uses like listening to YouTube shows in the background.
And that fundamentally changes the relationship a user has with audio and the needs they have from their audio devices. Instead, Sonos, like the rest of the audio tech industry, has found itself immersed in the never-ending pursuit of perfect acoustics with investment in features like spatial audio, Dolby Atmos integration, multi-channel surround, automatic acoustic balancing, and a range of other efforts that provide meaning only to music and home theater use cases.
2 – The Early Adopter Trap
This leads directly to my next point. I think it makes complete sense that Sonos launched itself first as a premium product. You were forging the way for a brand new technology that required a lot of R&D and cutting-edge hardware. And the people most willing to pay for it were techie audiophiles that had very particular tastes for high-end sound quality. It’s no wonder why Sonos has put so many resources into things like automatic acoustic balancing and a wide-ranging, cannibalistic hardware portfolio that allows people to mix and match speakers to meet their exact sound preferences.
However, this has also been the most direct cause for the rut that Sonos is in now. On the one hand, the music and home theater-loving audiophiles are exactly the people who are ready to spend thousands of dollars on their ideal setup. But on the other hand, their expectations are so high that is has cornered Sonos into becoming an exclusively premium brand – inaccessible to the remainder of the 96% of the population that loves listening every day. As we’ve seen over the last several years with Sonos’ continuously failed attempts to cut features and shift technology architecture for more cost-effective products, Sonos’ current customer base will not stand for a loss of features or quality, even if it could make Sonos’ technology more accessible to more households. If it has the Sonos brand, it needs the full package of features and the corresponding hardware expenses, even if only a niche group actually uses those features meaningfully.
And the last danger stemming from this cycle is that, from the friends and colleagues that I’ve seen at Sonos, the company has become one dominated by audiophiles building for other audiophiles – without the average, run-of-the-mill podcast and YouTube listener having a say on what products they would like to see to improve their daily lives.
3 – “IP-Lock”: Your Inverted Moat
All of this leads to the last problem. Sonos was founded in 2002, before the age of the smartphone and barely when the iPod was starting to gain popularity. As a result, you’ve had to invest in developing some really complex technology to make wireless multi-room audio possible before people even had apps or MU-MIMO Wi-Fi routers. And to this day, the majority of Sonos products still feature things like an ethernet port and the ability to buffer and relay audio speaker to speaker, even if a lot of people are simply using Apple AirPlay or the Alexa ecosystem to use their Sonos speakers.
The problem with all of this is that, not only are you forced to keep up with your existing IP to satisfy your historic audiophile customer base as I mentioned previously, but you let your company continue to be defined by the IP you invested in developing over two decades ago – keeping your focus on maintaining a valuable but unprofitable closed ecosystem of Wi-Fi speakers without thinking about what the next big problem is to solve in the industry.
What’s going to save Sonos isn’t to continue to optimize and defend your existing IP – the latest court rulings on your lawsuit with Google indicate that this may not even be possible – but to do what you did best back in 2002: identify the challenges people are facing in their audio experience today, and building platforms to solve those challenges. Sonos’ potential was never tied to being a great speaker company. It was tied to being a company that made audio a seamlessly integrated part of people’s homes and everyday lives. And frankly, we are still a far cry from that reality in most homes, and a big portion of that problem isn’t even a hardware problem.
Getting Past $2B
Taking several steps back to look at people’s audio needs today, I see an opportunity that goes far beyond the $2B revenue milestone that you’ve been trying to hit. As I mentioned at the beginning of my letter, I think Sonos could be a $100B+ company. But to do so will require you to reframe how you think about the audio space and your place in it. If I were leading Sonos, here are three key things that I would focus on to get there:
a. Thinking beyond speakers – the larger potential of the audio space
b. Multi-brand strategy – breaking out of the premium corner without brand dilution
c. Reducing cannibalism through modularity
A – Thinking Differently About the Audio Mission
I mentioned some data earlier about what daily audio listeners are spending their time on: YouTube (25%), Podcasts (18%), Audiobooks (5%). These are the fastest growing segments and together make up nearly half of the daily time spent with audio. More importantly is what this trend represents – that people are now using audio not just to have artful experiences, but as a convenient way to stay connected to the content and information of the internet without being tethered to a screen.
In fact, from my anecdotal experience growing Dio, people are no longer looking for audio solutions that are going to require them to sit on a couch staring at a display – they’re turning to audio to give them the freedom to go live their lives without being disconnected from their content. This is what has made AirPods so phenomenally successful.
But when you think about a display-free world where people can still engage and interact with the internet intuitively through audio, you’ll realize that there is a huge gap in what people can even do with audio today. Discovery, search, ecommerce, social – all these fundamental pillars of the display-first internet have no parallels in the audio medium yet. And while just about anyone can go out and purchase a microphone to record a podcast, it’s still impossible to even generate audio content without a display-first device like a computer or smartphone.
There is an entire internet of audio waiting to be built, with platforms that I believe would be very much welcomed by the 96% of the population that listens to audio every day. The opportunity here goes far beyond $2B, but it does require Sonos to stop focusing on how you can re-package your previously developed IP in new versions of Wi-Fi speakers and to start innovating once again to make people’s lives better. And with today’s AI boom, the opportunity has never been more imminent.
B – A Dual-Brand Approach to Mass Market
What makes Sonos so uniquely fit to chase the opportunities I mentioned above is that hardware is still the bottleneck for most households to shift to that display-free world. You can make the most useful and valuable social audio tool in the world, for example, and adoption would still be constrained so long as people have to grab a pair of headphones or a portable Bluetooth speaker in order to use it.
Today’s audio devices are simply not built to make audio a seamlessly integrated part of everyday life. That is, except Sonos (and Dio). But in order for Sonos to become successful in this regard, Sonos’ core multi-room audio technology will have to become truly accessible to the mass market. And that leads us back to the challenge I mentioned previously of Sonos being locked into its status as a premium brand.
Lucky for us, the way forward has already been forged by nearly every other audio tech company in the industry. In order to really compete with the likes of Harman, Logitech, and Sonova, Sonos has always needed to become a multi-brand company in its own right. And rather than dilute the Sonos brand itself, having a separate mass-market tier brand is the best way to experiment with different product architectures and reducing features that aren’t core to the average home’s requirements, all without alienating existing customers or irreversibly raising expectations from new ones.
To this day, most people still don’t know that JBL is owned by Harman, Sennheiser is owned by Sonova, or Ultimate Ears is owned by Logitech. Each brand has developed its own core identity in its own right, separate from the parent company, while still utilizing its parent’s expertise, scale, and distribution. Becoming a multi-brand company, I believe, is not only the strategic choice to break the early-adopter, premium-market corner that Sonos is in, but is also the only way to survive in the competitive audio device market. Otherwise, I fear, Sonos may just become a sub-brand itself to another big tech or big audio company – which would be a huge loss for the world.
C – Reducing a Cannibalistic Portfolio through Modularity
And this brings me to my next focus area of reducing product cannibalism in Sonos’ portfolio. When I look at Sonos' portfolio, I see tiered duplicates of nearly every category of speaker imaginable. The Roam and Move, the Era 100, Era 300, and Five, the Arc Ultra, Beam, and Ray...While I'm sure there was some rationale around capturing new market segments when originally launching these products, they serve ultimately to make the already niche techie audiophile Sonos audience to now choose between similar Sonos products.
As I’ve mentioned, the Sonos brand unfortunately cannot be everything to everybody. The sheer requirement to have every product work together for multi-channel surround already prices even your cheapest products beyond what an average home can afford. And so, if we were to dedicate the Sonos brand exclusively to the premium techie audiophile, there are several product tiers that can likely be eliminated from Sonos’ portfolio in exchange for launching new products under a different mass-market oriented brand with greater freedom to make cost and feature tradeoffs.
We’ve seen this example at work already in the auto industry, with the purge of sedan vehicles across most major auto brands, after a similar over-expansion of their portfolios to try and meet the needs of every possible niche of consumers at the expense of operational efficiency.
And with Sonos' strength in modularity, I think it is one of the few companies that can truly chase a "zero cannibalism" standard rather than the conventional hardware tech strategy of "all-in-one devices". Instead of offering an entirely competing product line for a similar concept of speaker - such as the Sonos One SL and Sonos One in the past - why not offer customers that want particular upgrades the opportunity to add those on as external accessories and create an even deeper level of modularity and personalisation for the home? Imagine the Sonos One SL converting to the Sonos One with a simple microphone attachment module that users could purchase and attach, completely negating the need for two nearly identical SKUs.
Ultimately, these steps can give Sonos a real shot at delivering the promise of display-free convenience to the whole world. If you lean into modularity, you’re not just trimming the fat - you’re handing control back to users, letting them shape their audio setup around their own routines instead of some predetermined “ideal” use case. That’s how you make Sonos relevant to the 96% of listeners who just want audio that fits seamlessly into their day-to-day. If Sonos can move past the urge to be everything to everyone as an all-in-one premium device brand, and instead focus on giving people the freedom to build what works for them - through multi-tier branding and true add-on modularity - you’ll be a lot closer to breaking out of the niche and leading the next wave of home audio.
Conclusion
At the end of the day, I’m writing this letter as someone passionate to see Sonos bloom into a pioneering giant for the audio industry. As I mentioned, this opportunity could be upward of $100B - with 96% of the population actively listening for hours a day and 1.4B households connected to stable Wi-Fi worldwide, taking these steps to finally serve the mass market can shoot you well beyond this mark.
I’m sure you see a much fuller picture of the company from where you are on the inside, but I thought I’d share these thoughts with you as an outsider looking in, in case any of this could be of some value to you. From the bottom of my heart, wishing you and the tireless army of Sonos employees the best as you navigate these latest challenges.
Cheers,
Akarsh Vinod
Dio Founder & CEO