Power

Sonos is betting big on a post-pandemic future, and tougher antitrust policies to boot

Sonos CEO Patrick Spence has high hopes for the new administration's antitrust policies, arguing they should benefit us as citizens, not just consumers.

Sonos is betting big on a post-pandemic future, and tougher antitrust policies to boot

Sonos's new speaker seems made for our post-pandemic future.

Photo: Sonos

Are you ready for the pandemic to be over? So is Sonos.

The smart speaker maker weathered COVID-19 unexpectedly well, with consumers snapping up sound bars and speakers to make those long days at home a little more bearable, which turned the 2020 holiday quarter into the best quarter in the company's 18-year history. "It's been a very strange, but very successful year for us," said Sonos CEO Patrick Spence.

Now, Sonos is ready for things to change. The company introduced a new small and portable speaker Tuesday, called the Roam, that seems made for our post-pandemic future. And with the Biden administration appointing antitrust experts like Tim Wu, Spence believes there may be a chance for a policy reset. In an interview with Protocol, Spence talked about his hopes for new antitrust policies, the company's plans for the coming years and why Sonos decided to fast-track the Roam speaker in the face of the pandemic.

One of the surprise winners of the lockdown was the Sonos Move, a portable $400 speaker the size of a small space heater. "That became a big product for people because they're going out to their yard or patio, I suspect," Spence said. With the Roam, Sonos is now betting that its customers are itching to venture a little further. Priced at $169, the Sonos Roam is the company's first fully portable Bluetooth speaker that doubles as a full-fledged member of the Sonos smart speaker family when within reach of a home Wi-Fi network.

"We actually prioritized [it] over other products on our roadmap when we hit the pandemic last summer," Spence said. "We couldn't have seen when things would be reopening. But with Roam, we did say: 'OK, let's get it out a little sooner.' And we were willing to push something else out that we thought would be less suited for the moment."

With the Roam, Sonos also has the potential to grow its audience. "It gives us the opportunity to speak to a new customer," said Ryan Richards, Sonos Global's product marketing director. Traditionally, the company has targeted wealthier households; Spence is scheduled to reveal at an investor event Tuesday that it is currently in 9% of the affluent homes in its existing markets. With the exception of cheaper Sonos-powered speakers made by Ikea, the Roam is the first Sonos speaker selling for less than $200.

"$169 isn't cheap," Spence said. "But in a world of thousand-dollar iPhones, it is something that is accessible for people." That also means Sonos can more easily target students and others who may not have wanted to spend hundreds of dollars on a home hi-fi system just yet. "It will appeal to a younger demographic," Spence said, adding: "We want to quadruple the number of people actually using our products and services."

Sonos has long relied on its existing customers to drive a significant chunk of its sales, with consumers adding to their home hi-fi system over time. With Move and now Roam, the company expects that trend to continue. Right now, the 11 million existing Sonos households own close to three of the company's speakers on average. In the coming years, Sonos wants that number to be more like four or six, which will allow the company to reach $2.25 billion in revenue in fiscal year 2024.

Part of that number will also be a modest but growing contribution from the company's still nascent services business. Sonos Radio, the company's ad-supported radio service that launched last April, has become the third most-listened-to music service on Sonos speakers. Its paid HD tier, launched in November, has seen "good traction," according to Spence, who laid out plans to reach 500,000 Sonos Radio HD subscribers, without specifying when exactly that may be.

Succeeding with those ambitious goals depends on Sonos beating its competition, which now includes everyone from traditional hi-fi brands to Bluetooth speaker makers to tech giants like Google and Amazon. The company has publicly feuded with the latter two, alleging anti-competitive behavior, and currently is in court against Google over alleged patent infringements.

That might be why Sonos has a very different take on the new administration's anticipated stance toward Big Tech than some of its industry compatriots. In our conversation, Spence expressed optimism about the recent appointment of Tim Wu to the National Economic Council, saying it signaled a "different perspective" on antitrust issues than the one held by the previous administration.

He also had high praise for Rep. David Cicilline, who chairs the Subcommittee on Antitrust, Commercial and Administrative Law, in front of which Spence testified in January 2020; he said that it was key for the administration to take steps against anti-competitive behavior. He pointed to tech companies blocking Sonos from using multiple voice assistants on their products, and pricing their speakers below cost, which Spence in the past called out as illegal predatory pricing.

Spence also argued that tech giants use what he called "efficient infringement" to steamroll smaller competitors that may not have the resources to fight patent infringement lawsuits, or simply didn't patent all the technologies they developed. "It's principles that we've had in the system. We just haven't enforced them as a country," he said, adding that there may also be a need for additional safeguards. "Hopefully we'll come up with some new ones to just make sure that we are spurring more companies, competition and entrepreneurship."

Ultimately, he said, creating an equal playing field requires a different mindset from everyone, consumers included — a mindset that isn't just focused on the cheapest possible sticker price. "Consumers are also citizens who need jobs," Spence said. "We're all part of the same system. My hope is that people think through the system and understand that it has to work for us as citizens, not just as consumers. A lower price doesn't necessarily mean that the whole system is going to be healthy and that it's going to work for everybody."

Enterprise

The limits of AI and automation for digital accessibility

AI and automated software that promises to make the web more accessible abounds, but people with disabilities and those who regularly test for digital accessibility problems say it can only go so far.

The everyday obstacles blocking people with disabilities from a satisfying digital experience are immense.

Image: alexsl/Getty Images

“It’s a lot to listen to a robot all day long,” said Tina Pinedo, communications director at Disability Rights Oregon, a group that works to promote and defend the rights of people with disabilities.

But listening to a machine is exactly what many people with visual impairments do while using screen reading tools to accomplish everyday online tasks such as paying bills or ordering groceries from an ecommerce site.

Keep Reading Show less
Kate Kaye

Kate Kaye is an award-winning multimedia reporter digging deep and telling print, digital and audio stories. She covers AI and data for Protocol. Her reporting on AI and tech ethics issues has been published in OneZero, Fast Company, MIT Technology Review, CityLab, Ad Age and Digiday and heard on NPR. Kate is the creator of RedTailMedia.org and is the author of "Campaign '08: A Turning Point for Digital Media," a book about how the 2008 presidential campaigns used digital media and data.

Sponsored Content

Foursquare data story: leveraging location data for site selection

We take a closer look at points of interest and foot traffic patterns to demonstrate how location data can be leveraged to inform better site selecti­on strategies.

Imagine: You’re the leader of a real estate team at a restaurant brand looking to open a new location in Manhattan. You have two options you’re evaluating: one site in SoHo, and another site in the Flatiron neighborhood. Which do you choose?

Keep Reading Show less
Fintech

The crypto crash's violence shocked Circle's CEO

Jeremy Allaire remains upbeat about stablecoins despite the UST wipeout, he told Protocol in an interview.

Allaire said what really caught him by surprise was “how fast the death spiral happened and how violent of a value destruction it was.”

Photo: Heidi Gutman/CNBC/NBCU Photo Bank/NBCUniversal via Getty Images

Circle CEO Jeremy Allaire said he saw the UST meltdown coming about six months ago, long before the stablecoin crash rocked the crypto world.

“This was a house of cards,” he told Protocol. “It was very clear that it was unsustainable and that there would be a very high risk of a death spiral.”

Keep Reading Show less
Benjamin Pimentel

Benjamin Pimentel ( @benpimentel) covers crypto and fintech from San Francisco. He has reported on many of the biggest tech stories over the past 20 years for the San Francisco Chronicle, Dow Jones MarketWatch and Business Insider, from the dot-com crash, the rise of cloud computing, social networking and AI to the impact of the Great Recession and the COVID crisis on Silicon Valley and beyond. He can be reached at bpimentel@protocol.com or via Google Voice at (925) 307-9342.

A DTC baby formula startup is caught in the center of a supply chain crisis

After weeks of “unprecedented growth,” Bobbie co-founder Laura Modi made a hard decision: to not accept any more new customers.

Parents unable to track down formula in stores have been turning to Facebook groups, homemade formula recipes and Bobbie, a 4-year-old subscription baby formula company.

Photo: JIM WATSON/AFP via Getty Images

The ongoing baby formula shortage has taken a toll on parents throughout the U.S. Laura Modi, co-founder of formula startup Bobbie, said she’s been “wearing the hat of a mom way more than that of a CEO” in recent weeks.

“It's scary to be a parent right now, with the uncertainty of knowing you can’t find your formula,” Modi told Protocol.

Keep Reading Show less
Nat Rubio-Licht

Nat Rubio-Licht is a Los Angeles-based news writer at Protocol. They graduated from Syracuse University with a degree in newspaper and online journalism in May 2020. Prior to joining the team, they worked at the Los Angeles Business Journal as a technology and aerospace reporter.

Enterprise

Celonis vows to stay independent despite offers from SAP, ServiceNow

Celonis is convinced standalone mining vendors can survive. But industry consolidation paints a different picture, and enterprise software giants are circling.

Celonis CEO Alex Rinke turned down offers from ServiceNow and SAP, according to sources.

Photo: Celonis

For the past decade, any software vendor that touted new levels of automation and data-driven insights appeared to have seemingly unrestricted access to capital. Now, as valuations drop and fundraising becomes more difficult, founders and company leaders are facing a difficult decision: look to be acquired or try to go it alone.

At Celonis — which, at an $11 billion valuation, is one of the buzzier software upstarts — that question appears to have already been decided. Enterprise software giants ServiceNow and SAP made offers in the past year to buy the process-mining firm, according to sources familiar with the deliberations, which were turned down because the Celonis leadership team wanted to remain independent.

Keep Reading Show less
Joe Williams

Joe Williams is a writer-at-large at Protocol. He previously covered enterprise software for Protocol, Bloomberg and Business Insider. Joe can be reached at JoeWilliams@Protocol.com. To share information confidentially, he can also be contacted on a non-work device via Signal (+1-309-265-6120) or JPW53189@protonmail.com.

Latest Stories
Bulletins