Changing the World – SONOS Lays Off and Apple Pays Off

I haven’t written a post in the “Changing World” category for a couple months, but it seemed appropriate given the shocking news that Sonos, one of my favorite companies, had layoffs this week that included acoustic engineers, marketing, and human resources personnel. The title of the Engadget post, “Sonos announces layoffs, refocuses on streaming and voice tech” says it all, but what happened? They make fantastic products that “just work,” last for years, and have incredible sound quality. They revolutionized the wireless home music system industry years ago with the first mesh Wi-Fi networking speaker systems. The article mentions that one reason for the layoffs is competition from Amazon’s Echo which is a hands-free speaker you can control with your voice. Maybe, but Echo is a completely different product so the problems seem to go much deeper. Two issues seem dominant: marketing and technical stagnation.

In marketing, Sonos seems to think they have the mass appeal of Apple, which of course, they don’t. Even Sonos’ most recent high profile ad during the Grammies, “Apple Music +Sonos” doesn’t showcase the advantages of a multi-thousand dollar mesh network music system over hundred dollar Bluetooth speakers. Apple on the other hand has focused on marketing the value of their products throughout the life of the company. When Steve Jobs returned to Apple one of his first projects was the highly successful Think Different campaign. I even wrote about it in the post, “Right Intent: Explaining the Unexplainable.” Recently I came across a video, “Apple Confidential,” in which Jobs is speaking at an internal Apple meeting right before the campaign’s launch. He explains that marketing is about values and that Apple has to be very clear about what it wants people to know and remember about them. Sonos has obviously had trouble with this. Later, at 6:34, Jobs goes on to say that Apple’s core value is that people with passion can change the world for the better. A lofty goal, especially for a meeting in 1997 when Apple was very close to going out of business.

Sonos has actually changed their industry dramatically, but has stagnated in recent years. Purists might care about a speaker that adapts its audio response to its vertical or horizontal orientation, but many more people care about Bluetooth connectivity, which Sonos does not support. Their app has no problem streaming from a wide variety of music services, but it was also clear they were stagnating when it took six month to integrate Apple Music. The result was their best year ever in 2015 followed by layoffs in March of 2016. This was clearly not a commitment to changing the world for the better, but more like giving up at the first sign of problems. It immediately changed my opinion of the company and now it looks like they are simply preparing themselves for sale. Even worse, the high end customers they appeal to will certainly be concerned now that Sonos’ long term viability is questionable. With proprietary hardware and software, their speakers simply will not work long without regular software updates.

Apple is not having an easy time these days either, but they are fighting for their values, releasing new products, and generally adapting in the face of competition. Sonos could have done so many things with their world class audio labs and acoustic engineers: headphones, Bluetooth, speech recognition, and simply reducing prices in some key areas. Instead, they just let employees go, dealing a blow to their wonderful reputation and a corporate culture they worked so hard to create. When Apple had trouble with their iAd business, they did “layoff” about 100 people, but committed to “compensate for iAd layoffs with new job openings.”

Companies sometimes fall onto hard times. The loss of a major account or the entry of a major competitor can seem like the beginning of the end. However, to healthy companies, it is an opportunity to refocus on strengths, create new sales and marketing strategies, and in general rise to the challenge. The next post in this series will provide details on how and where to implement this change and don’t worry, you won’t have to “meet your Waterloo” to do it.