Sonos is preparing a wave of premium new home speakers for release next year, as The Verge has exclusively reported. But that’s familiar territory for the company. As it turns out, Sonos also has its eye on several new product categories. Four of them to be specific. According to CEO Patrick Spence, the first device from one of these categories will arrive sometime in fiscal year 2023. The company’s hardware lineup is already locked and set for the holidays, so in terms of timing, we’re looking beyond January.
“While we are always cautious when talking about our product roadmap, we are investing in products that will allow us to enter four new categories, one of which we expect to announce in fiscal ’23,” Spence said on Sonos’ Wednesday earnings call. “We have a proven track record of gaining share when entering a new category,” he said, emphasizing that new categories will help diversify Sonos’ business in the long term.
Spence didn’t offer any hints on what those categories might be. However, based on the rumor mill and Sonos job postings from earlier this year — the company is now slowing hiring like everyone else in tech — there are a few possibilities. The first and most likely prospect is that Sonos will finally deliver its long-rumored wireless headphones. That would mark another portable audio category for Sonos; it already sells Bluetooth smart speakers.
This product has surfaced in patent filings over the last couple years and was detailed by Bloomberg back in 2019. Presumably, Sonos-branded headphones would offer impressive audio quality and provide unique integration with the company’s speakers and whole-home audio system. Sonos has acquired more than one startup that could contribute to the development of wireless headphones. It purchased T2 Software, a company that had been focusing on the Bluetooth LE Audio standard and related LC3 codec.
That’s not the only piece of the puzzle. Earlier this year, Sonos announced its acquisition of Netherlands-based company Mayht and credited the startup for having “invented a new, revolutionary approach to audio transducers.” Sonos added, “Mayht has re-engineered them to enable smaller and lighter form factors while producing exceptional sound.”
Mayht’s technology could make its way into Sonos’ upcoming flagship desk speaker — codenamed Optimo 2 — that will deliver immersive Dolby Atmos sound in multiple directions, but it could theoretically also make sense in a headphone product. “We have a lot of opportunity remaining in audio,” Spence said Wednesday. “We know that people spend about $96 billion a year there. So we have a lot of opportunity to keep expanding in audio and take more and more of that share. And you can bet that’s what we’re focused on.”
But what about those other categories that are further down the road? One possibility could see Sonos make a push into video streaming devices to complement its wide net of supported audio streaming services. Back in March, Protocol reported on job listings pertaining to a “Home Theater OS.” But Spence made it sound as though Sonos is in no rush to expand outside its audio comfort zone, and the company will take a calculated approach whenever it decides to make that move.
“I do believe that our brand is strong, and we have a lot of opportunity in other categories over time,” he said. “But I also think that you need to be thoughtful in terms of how you move into those, how you do it for your own brand and build on your own brand strength and capabilities and all of those things.”
So the far-off picture is anyone’s guess. But we have a much better idea of what’s coming next in the Sonos pipeline: Optimo 2. It’s likely to replace the Sonos Five as the company’s top-tier standalone speaker and will deliver the best sound quality of any Sonos product to date.
The Verge has reported that there are several devices in development under the Optimo program. For Sonos, the core mission is all about bringing more people into its ecosystem. And once a customer has purchased one product, the next goal is getting several speakers into their home and offering tempting upgrades over time.
“40 percent of our households are single product households, whereas our average multi-product household has 4.3 products,” Spence said on the call. Sonos believes that there’s $5 billion in potential revenue if it can successfully convert those single-device homes to the multiproduct average. But the company has also learned that customers can push back if nudged to upgrade before they’re ready.
“Our flywheel of new household generation and household repurchase is working,” Spence added. He even alluded to the upcoming Optimo speakers — sort of. “And in the next few years, we will spin it even faster. We expect to accomplish this by focusing on three things. First, we will reset the bar in our existing product categories, further differentiating Sonos as the choice for premium home audio. (Emphasis by The Verge.) Second, we will enter new naturally adjacent product categories, as you have seen us do with portables.” The third focus area for Sonos is expanding its geographic reach to new markets.
It’s not hard to see headphones as the next “naturally adjacent” category. Should that end up being the case, Sonos will face substantial competition from the likes of Sony, Apple, Bose, and other brands. If you’re wondering what could possibly be compelling about Sonos-branded headphones, I’m right there with you. Maybe some kind of effortless handoff between speakers and the headphones? Who knows.
In any event, all of Sonos’ planning is subject to change should the economy take a nosedive. “If we start falling short of our targets in fiscal ’23, we won’t hesitate to adapt to the environment, prioritize our key initiatives, and protect the profitability of our business,” Spence said. The company has shown that it’s willing to do this before: it delayed the release of the Sub Mini by a couple months as the direct result of a “challenging” quarter and after the $279 Ray soundbar got off to a rocky start.
“Last quarter, we discussed how Ray, our entry-level sound bar, underperformed our internal expectations upon launch. We are pleased to see that it is gaining momentum,” Spence said Wednesday. “I think it shows that having a good, better, best kind of range in these areas makes sense, and customers are responding to that.”
Sonos plans to release “at least two” new products in fiscal year 2023, according to Spence. That’s the company’s standard pledge, but since the delayed Sub Mini technically fell into the new fiscal year, his clarification means that there are still multiple devices on the way.