For Sonos, 2020 began in dramatic fashion. While the tech world was focused on CES, the company made a splash by suing Google for allegedly infringing five of its wireless speaker patents. Sonos said this was just a small portion of Google’s overall infractions, noting that both Amazon and Google likely violated about 100 patents each. Google counter-sued in June, and Sonos filed more charges in September.
Sonos is well within its rights to defend its patent portfolio — and the company has been working on wireless music-streaming tech for longer than just about anyone, so it’s entirely possible its claims have merit. But in a year when the company launched a flagship home theater speaker, updated its high-end, music-focused speaker and made its first foray into original content, these lawsuits made me wonder whether a legal battle was actually Sonos’ last-ditch effort to stay competitive. Further underscoring the stakes, Sonos laid off 12 percent of its workforce in June due to COVID-19.
Just as concerning is what Sonos’ competitors did this year. Ahead of the holiday season Amazon, Google and Apple all launched $100 speakers that delivered better music quality than we’re used to seeing from devices in this size and price range. Amazon and Google’s most popular smart speakers have been the $50 Echo Dot and Nest Mini, respectively. Their larger, more expensive speakers like the standard Echo and Google Home didn’t stack up to the Sonos One. Sure, the $200 One is more expensive than the Echo and Google Home, but it provided significantly better sound and offered tight Alexa and Google Assistant integration as well.
Amazon started really chipping away at Sonos’ advantage in audio quality last year with the $200 Echo Studio, a large, heavy speaker that delivers outstanding sound. And the company put even more pressure on Sonos with this year’s $100 Echo, which sounds better than basically any other speaker at this price point. Not to be outdone, Google’s Nest Audio and Apple’s HomePod mini both offer robust audio quality in a compact package for only $100. They don’t sound as good as the Echo, but they’re still solid options for Apple and Google users.
These speakers are pretty new to the market, but it’s hard not to imagine them putting even more pressure on Sonos. Amazon, Google and Apple all have massive advertising budgets, and these companies aren’t even depending on speakers to make money. Sonos’ entire business, on the other hand, depends on its ability to sell speakers — and while these new devices are just a small part of the bottom line for those three tech giants, even modest sales for any of them could eat into Sonos’ bottom line.
Sonos has never competed in the low-end speaker market; the company’s cheapest offering is the $180 One SL and the cheapest with a voice assistant is the $200 One. That hasn’t stopped the brand from building a loyal following of music lovers who enjoy high-quality audio. Indeed, its business grew despite scads of cheaper Bluetooth speakers that became commonplace over the last decade. And inexpensive voice-activated speakers like the Echo Dot and Nest Mini feel like the Bluetooth speakers of this age — a cheap and easy way to get a voice assistant around the house, even if the music quality isn’t very good.
The HomePod mini, Nest Audio and 2020 Echo flip the script, though. I would have never recommended anyone use the Echo Dot or Nest Mini for listening to music aside from the most casual of scenarios, but these new speakers should meet the “good enough” level of performance for more people. And while multi-room music is an easier and better experience with Sonos, people who don’t care about that feature will probably be happier saving $100 and getting an Echo. Or, for $200 you can get two Echos and have stereo or multi-room audio for the same price as a single Sonos One — and you’re not giving up much, if anything, when it comes to audio quality.
This puts Sonos in the unenviable position of both battling it out in the courtroom against Google, as well as fighting off stronger competition in the smart speaker market. Sonos hasn’t needed to compete in the low end of the market to be successful, but it also hasn’t faced such strong challenges from big-name competitors either.
A licensing deal earlier this week between Sonos and digital infrastructure company Legrand could foreshadow what Sonos hopes to achieve with its lawsuits. Legrand is now paying to license Sonos patents for its own multi-room audio solutions. If the company managed to land a similar agreement from Amazon and Google, it would surely bolster Sonos’ bottom line and make the competition easier to weather.
“We believe in a fair marketplace where companies compete on a level playing field and contribute with their own innovations and experiences,” Sonos chief legal officer Eddie Lazarus said in a statement earlier this week. “We’re pleased to see more companies such as Legrand recognizing the strength and value of our IP and providing appropriate compensation.” It’s not hard to read this as a message to Google and Amazon.
Given how long a complicated legal battle can take to resolve, it’ll likely be months or longer before we find out if Sonos can address its issues either through a settlement or a court ruling. Sonos had no comment on its ongoing litigation
In the meantime, Sonos will likely stick to its existing strategy — but if this new wave of smart speakers make a dent in its business, a $100-ish Sonos speaker could become a reality. This wouldn’t be the first time Sonos embraced a technology it had previously dismissed. The company released its first portable speaker with Bluetooth in 2019, an expansion to a part of the speaker segment where it previously didn’t compete.
To be clear, I don’t think Sonos is going anywhere soon — the company has millions of devoted users and its stock price has surged throughout much of 2020 after bottoming out earlier in the year. But, it wouldn’t surprise me to see the company diversify its offerings in the next year or so to better compete against Amazon, Google and Apple’s less expensive offerings. If those companies can make small speakers that sound great, Sonos should be able to take its years of experience to punch back as the big guys move in on its turf.
via https://AiUpNow.com December 18, 2020 at 12:39PM by , Khareem Sudlow,
