No digital music company is immune to competition and safe from downsizing. Digital products maker Sonos is now a casualty in the race to bring digital music into the home.
Sonos CEO John MacFarlane wrote in a blog post Wednsday the company “had to make some changes to our team” and is “in the process of letting go of some Sonos employees who have played important roles getting us to this point.” He did not specify how many employees are being laid off.
MacFarlane says Sonos is “doubling down” on its “long-held conviction that streaming music is the dominant form of consumption now and in the future.” Indeed, Sonos has worked with many streaming services, all the way back to Rhapsody before the age of the smartphone, in providing a simple solution for in-home digital music.
Just a few years ago, Sonos was a clear leader in the in-home digital music market. Its products are Apple-like in their ease of set-up. They work with a range of streaming services such as Spotify and SoundCloud. And they pack excellent sound into small packages.
But the market has changed. There are far more competitors and many cheaper alternatives. Roku, Google Chromecast and, more recently, Apple TV have given consumers more options for enjoying digital music through their televisions and in-home entertainment systems.
One new entrant -- and one mentioned in McFarlane’s blog post -- is Amazon’s Alexa, a standalone device that uses voice-recognition (think Apple’s Siri) to perform such tasks as streaming music, delivering weather reports and, of course, ordering goods on Amazon. Alexa has become a runaway hit. Just this week, the New York Times called it “the most promising candidate for the Next Great Gadget” title and a product “on a path to become Amazon’s next $1 billion business.”
In an earlier interview with Billboard, McFarlane said Sonos’s best days are ahead of it and predicated streaming will create a market larger than the heyday of the CD in 2001. That’s a tall order. Recorded music revenues have dropped more than 50 percent over that time -- even more when accounting for inflation. The question is where Sonos will be if and when that happens.