It’s a weird time for Sonos — and not because it recently got a new CEO. That transition seems to have happened without much drama, with Patrick Spence taking over a company he’d already been with for some time. But there is plenty of drama in the wireless speaker space where Sonos lives. The very idea of a “wireless speaker” has changed from just being a thing you use to play music and become a voice-controlled tube with artificial intelligence inside of it.
To be fair, it’s not that the Amazon Echo, Google Home, and whatever Apple and Microsoft are cooking up are all direct competition for Sonos. Sonos is still firmly at the high end of the speaker market, appealing in large part to audiophiles who like their hi-fi speakers. But all of those other speakers could be giving people less reason to buy a Play:1 or some other Sonos device.
When Spence took over, he sent out a memo to his employees that faced that new reality in a relatively clear-eyed way about the challenges Sonos faces from those assistant-style speakers. He noted that Sonos needs to have a “bias to action,” which is executive speak for “releasing products more quickly.”
A couple weeks ago, when Spence was making the press rounds in San Francisco, we sat down with him for a candid discussion about Sonos’ future. He hinted pretty strongly that his company would finally think about making an “outdoor” speaker and explained why he thought Sonos would be able to become the Switzerland of wireless speakers — a place where Siri and Alexa and Google can all coexist. (Or perhaps a better metaphor would be Rick’s Cafe in Casablanca.)
We’re still a little dubious that all of Sonos’ partners will let that happen, but Spence believes Sonos’ track record in working with competing music services is as an indicator that he can pull it off. Of course, between now and then Sonos needs to get better microphones in (or attached to) its products.
And as for people buying Echoes instead of Sonos speakers? Spence’s hope is that they’ll step up to Sonos eventually.
This interview has been edited for clarity and length.
It seems like Sonos lives at the high end of home audio, and then Alexa came in and is just doing home assistance stuff and people are just buying that speaker because the sound is good enough. And now that's what they're filling their home with because they're cheaper. Do you feel like Sonos wants to stay at the high end of home audio, or do you feel like you need to move into the low end?
I think the good thing about what Amazon and Google have done is get more people interested in [home audio]. I think that a Play:1 is $199. I really believe that if we do this right, that there'll be a lot of people that we target that'll want to step up to something like a Play:1, for instance, as part of it.
Definitely things like sound quality continue to be really important to what we do. I think that reliability and quality of the Sonos experience ... People know it's rock solid. That's what we want to stick to. Make sure we have that really quality experience.
Then [you think about supporting multiple] services, which I think are really important for people. As you think about the home, it's just different. You know my kids use Spotify, I use Apple Music, I use Google Play Music, my wife uses Pandora. You need something that can support all of those. I think that's where not everybody's going to use Alexa. Not everybody's going to use Google Assistant. I may use one, my wife may use another. That's where we're in a unique position in the industry as opposed to this notion of like high end or low end or anything like that.
What was your first impression of Alexa?
I was immediately saying, "This is important as a technology.” In terms of creating something we've always talked about, which is “time to music.” How quickly can you get that music playing? As I watched my own kids start to use that and say, "I'm not going to go get the iPad or an iPod to be able to do it." I saw it and I said, "We really need to get on this bandwagon. How are we going to be able to make it faster to get to your music and get it playing?"
Now it's not great for discovery. It's not great for going deeper and building a playlist, [which are] a bunch of things that you need. So it's a complementary thing to having an app or another experience.
Was your first thought, “We're going to try to build this type of feature set ourselves,” then? Or did you start talking to Amazon right away?
We started engaging with Amazon right away because — I mean — you know our history. We didn't try to create a music service. We know there's people out there that do a really good job of that. You see it with Spotify, you see it with Apple, you see it with follow players. We knew people would be putting billions into these assistants. It's much better, in my opinion, if we are partnering with some of the players out there. I think it's been really interesting to watch.
You know Amazon, right from the get-go, has been really open about engaging on it. We found a really good partnership there. I'd say with Google, it was interesting at the beginning to see like how much was it going to be a push of home versus the Google Assistant. I think even they, as they've started to get into this, really said, "Okay, let's open this up and try to get our Assistant on as many devices as possible."
So if you knew right away you wanted Alexa on Sonos, can you tell us why it hasn’t come out yet? What’s taking so long?
We're doing it a little differently in terms of the way we approach it. Of course, we could have done it [on a different scale] and been off and running that way. But you know we think broader about the experience and what's possible. We're actually doing some work with them which is unique around the music experience that we're creating. We believe that it's worth investing that time and energy to create something a little bit more unique. Others will be able to use whatever we're working with Amazon on, and they'll be able to build on that. I think it's really important we get that experience right, and that we are thinking about how we support a world where there are multiple voice services, too.
We didn't want to end up in a situation where we're only supporting one. You know, for instance, at CES, a lot of those devices are dedicated to one voice service. It would be like a speaker that could only do Spotify.
How useful is that really in the home context? We want to make sure that customers have an opportunity to use any of the voice services that are out there.
Do you really think it's likely that Sonos will be able to be agnostic in the coming battle of who's going to be the main assistant in homes? We're already seeing Google and Amazon starting to fight. Maybe Apple will come in someday. All of these companies are deeply incentivized to try and get their partners to sign deals that are exclusive. Do you really think that a player as big in home audio as Sonos is going to be able to work with all those services at once?
I think we have a great track record on this. I totally understand the question, but I think we have a great track record on this through music services. Apple Music being on Sonos, I think, was a surprise to a lot of people, [and then we added] Spotify, Google Play Music. I think we sit in a unique position where we have an amazing set of customers and we've been able to actually kind of put that first.
Look, if you're Amazon, you know you need to be on as many devices as possible to get the orders, right? As you think about what the prime motivation is. For Google, if you're not on every device so that you can be for the search opportunity, that's a huge miss. If you think about the people that have Sonos today, that's why it was interesting to Apple Music, that's why I believe it's interesting to every voice service that's out there.
Do you think that every Sonos speaker in the future needs to have good far-field microphones so it can itself act as an assistant?
When will Sonos devices come with far-field microphones?
Will I set up my Sonos and part of the setup process is, "Which assistant would you like to use," and then the microphones will listen for just that assistant?
I actually see it a little bit differently because we should be able to, in the same way you can set up multiple voice services today, [you] should be able to do that [with assistants]. Again, I wouldn't want to lock a home into one particular one. If I want to ask Google a question and my wife wants to ask Alexa a question, we should be able to do that. That's what we want to pull off.
Are you going to work with Amazon to make that experience better with the Dot connected to Sonos?
That is really what we shared back in September, [which was that] the first phase of the experience will be an ability to control your Sonos from your Dot or Echo. That's kind of job one as we go through this and obviously you can tell where we go to job two. We would love to do the same thing with Google Home.
Fundamentally, there’s a tension for Sonos that’s not entirely unlike what you faced when you were at BlackBerry: disruption from a place you didn’t expect. You’re busy making high-end speakers, but maybe people care less about quality and are willing to just buy a ton of cheap Echos or Google Homes. How do you strategically make sure that you don't get hit from left field?
Absolutely. I am paranoid about disruption and particularly so because of my time at BlackBerry. That's why as quickly as I could I got an Echo. I go through these things. I try to use them as much as possible. As we think about that future, a couple things are happening.
One is that music streaming services are exploding and we continue to innovate and do things like allow you to play from the app like we've done with Spotify. And you'll see a lot more of that. We're going to continue to evolve our own app.
In the home, there are multiple rooms and multiple kind of use cases — around, for instance, the television or other screens. There's the outdoor room, there's the bedroom, the bathroom. There are different uses that are there that I think get underestimated. So as people think about the design of their home, and they think about what they want to put in their home, I'm not sure that they're going to throw a $50 Dot in every room — particularly if they love music — and that's who we're going after.
I don't think it's as simple as smartphones, [where] the people would buy into a particular ecosystem and then lock in and everything around that. I think the home and the number of people in a home make it a complex kind of situation, which I think we can take advantage of. We have a proven track record of supporting multiple services from competing vendors.
Certainly I'm sure there are people that have purchased a Google Home or an Echo instead of a Play:1, but I don't look at that [and think] they're dead to Sonos. There's an opportunity to get into their living room and get into other rooms in their home with some of the interoperability work we're doing.
What's an ideal sort of end game for you at Sonos? Does Sonos want to be its own giant, public technology company? Does Sonos see itself partnering in more serious ways in the future? What happens if another company offers to buy Sonos?
The good news is we're profitable, so we have some leeway with this, which I think puts us in a unique position. We'll see how it evolves over time. Right now, certainly, we're pretty clear in terms of what our mission is. To fill every home with music. We can see that we are able to do that.
We've built something unique. We're also not here in the Bay Area. We're in Santa Barbara and Boston and spread throughout the world. We do things a little differently. You may have seen we've done these private rounds as we go through which gives employees an opportunity for liquidity. We're fully diluted. We are an employee-owned company, as well. We do things a little differently and I think we have options. We're not in any rush to do anything, but our ultimate objective is to fill as many homes with music as possible. I see us being an independent company doing that.
Do you think if you were to grow in a significant way you would have to branch out into other products? Non-speaker products for the home?
No, I don't see that yet. I think there's a lot of opportunity ahead. Obviously, I'll be looking at what other things are out there, what do we need to do. But no, I don't foresee that being necessary for us to become a multi-billion dollar company.
What about different kinds of speakers? Sonos has resisted the temptation to put out just a Bluetooth speaker. Are you going to continue to resist that temptation?
I think the Bluetooth speakers are the ones that have been hardest hit by the introduction of things like the Echo and the Home. Certainly we're looking at like the different use cases for our products. I feel like we have so much room to run still in the home.
There's the outdoor room we haven't addressed. There's a whole bunch of interesting ideas we have around TV sound, there's a whole bunch of great ideas for the home. I think we've got a lot of room to run there. We'll continue to look at it and evaluate it but yeah. I think we've got a lot more to do in the home.
Has anyone offered to buy Sonos?
Do you think you need to be involved more in the Smart Home ecosystem? Do you want to talk to my Smart light bulb? Do you want to talk to my Smart thermostat? Or do you feel like Sonos is better thought of as one of the satellites in an Internet of Things home and not the hub?
I think anytime people get focused on that hub, it seems to become kind of overwhelming, and then they get into these weird battles of different standards.
Let's spend the rest of our time arguing about Z-Wave vs. Zigbee. I think that would be great.
Yeah! So for us, I think part of it is we get some benefits with working with the likes of Amazon and Google — where they're actually tying in and allowing that. We'll leave it to some of the companies that are working on those types of interoperability and we should be able to ride the wave of those, I hope. That's not an area I feel we can differentiate or should focus on.
You know, I'm sorry. I'm still hung up on this idea that you're going to be able to play nice with Google and Amazon and Apple...
I get it.
What's your strategy for pulling that off? Do you have leverage because of your install base of customers?
I think if you rewind a bit, if you sat there 10 years ago and said, “You're going to get every competing music service on a platform,” You would've thought “That's crazy, there's no way.”
I think today we're in a much better position [today] in terms of the homes that we're in. With Apple and the Apple Music side, certainly it [helped] that we're in all musician's homes and they said, "Listen, I'd love to try Apple Music but it'll need to be on Sonos." I think if you are trying to sell something, [or] you're the biggest retail engine that's out there, or if you're the biggest search engine that's out there, you're motivated to get into the kind of homes that Sonos is in.
I also think we approach it in a pretty open way. We also, unlike a lot of companies, we're not going to go try to compete then and extend into search or extend into retail or do some of the things that other companies will do. We stay very focused on what we're good at and then we'll partner for the rest of it. I think that does put us in a unique position and we've got a track record of doing it.
Lauren Goode contributed to this interview.