The Sonos Platform is Greater than Software or Hardware
Sono's platform has made its hardware more valuable – not less – over time.
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.
I believe that Sonos also has a few patents on the wireless mesh network they use to synchronize and control music throughout a system, which is why you only need to plug one device (doesn’t even have to be a speaker) into your network. These days you may be able to do it all wirelessly. This technology gives them a huge advantage in setup and a good ten year head start on the competing products from Monster and whoever else is entering the market now that standardized wi-fi and bluetooth technology makes mimicking the Sonos experience possible.
What will be interesting to see is if having this head start is enough to defend their business, or at least their margins, in a newly competitive business.
I <3 Sonos. In fact, I'm totally in love with it. And I agree, it combines so many of the things I love about good software with great design elements in the hardware.
In my view though, there is still some way to go though until Sonos completely integrates into the home. I'd like to be able to play video off my laptop with audio coming through Sonos. I hope that soon Sonos will be intuitive enough to know that if I'm scrolling through twitter on my phone and find a video to watch, I may want the option to interrupt the radio streaming and replace it with the audio from whatever I'm now watching.
I’ll be really interest to see how Sonos reacts as HUGE competitors increasingly begin to win the “home-hub” market. If people control their home via a Google (NEST) or Apple (Apple TV) system, where does this leave Sonos? Would the technology be distinct enough for people to use a separate system? Will Apple/Google force people to use their own music steaming system, meaning Sonos is marginalized if not compatible? Will the home-hubs be platforms in which developers can build “apps” on-top? Difficult and clever decisions for the company will have to be made if they are not to become the Dell of speakers….