Sonos is a hardware company. They make elegant wireless speaker, stereo, and home theater systems. You can stream Spotify to your speakers in the kitchen while you’re making dinner, Google Music in your bedroom while you study, and blast 5.1 surround sound while you watch Game of Thrones – and all of this simultaneous streaming can be managed from an iPhone or Android device.
What’s impressive is that Sonos was founded in 2002 and launched their first speaker in 2004. The speakers in the streaming set-up above could easily pre-date Spotify. Or Google Music. Or HBO GO. Or a smart phone like the iPhone that could control these speakers. Sonos founders had a vision early on that capable hardware is an important baseline in order to attract users, but that additional value would likely be unlocked with new software and digital innovation. Given the rapid speed of technological advancement, many hardware manufacturers have implicitly embraced the concept of “planned obsolescence.” Every year, companies pump out the newest and shiniest smart phone and invest millions of marketing dollars to convince customers that they cannot survive without the newest version. Apple’s introduction of the iPhone Upgrade Program last week is the perfect example of this. Year in and year out the value created with these incremental upgrades is dubious, though the value captured by Apple is without question.
Sonos is trying something different. They make high quality (and admittedly expensive) hardware that is built to last. They believe that customers typically buy speaker systems and expect to own them for 5-10 years and that customers will spend more for Sonos speakers if they trust that they won’t be rendered irrelevant in six months. Sonos wants their devices to serve as a platform that can be upgraded with software when new tech is developed. The initial value to the customer comes from the hardware and is augmented overtime with software updates and integration with new technologies. Sonos creates loyal customers who continue to purchase more speakers to augment their theater system or add speakers to more rooms. Meanwhile with every software update they’re creating enormous value for their customers and for their partners whose music and content is accessed via the platform.
Originally Sonos speakers were controlled with a dedicated tablet controller. When the App Store was launched, Sonos was one of the early publishers of a third-party app. Sonos rolled out a wireless update to its speaker system and suddenly their customers’ speakers were compatible with iPhones. Sonos has continued to develop new features: playing music in different rooms, aggregating music libraries from home computers and devices on the network into a single network library, collaborative playlists and DJ modes, and integrating new streaming services as they launch (Spotify, Songza, Google Play, Pandora, Beats Music, etc). There are 44 different supported services according to the Sonos website.
Sono’s strategy seems to be working. Their name is synonymous with wireless speakers and they continue to receive fawning press and accolades. I used the Sonos system for the first time a few months ago when visiting a friends home. I installed the app on my iPad and joined his wireless network. I was able to instantly add songs to the current playlist. The UX was incredibly intuitive. I saw his iTunes library and Spotify account and my Songza. And I was able to search across all over the available services to find music. Unlike a Bluetooth speaker system I didn’t have to pair devices and boot his computer off the speaker. It was a seamless experience.
In a world where our devices are fast enough, light enough, good enough, Sonos is winning by developing a digital platform that can add value to hardware long after the customer takes it home.