After facing challenges due to a failed app launch and leadership changes, rumors are that Sonos is now an acquisition target for companies like Amazon and Spotify.
Sonos Inc., which produces high-end audio products, has been under intense pressure recently as a botched software update combined with top executive departures is fueling questions about its future. Speculation has even gone so far as to involve predictions of Amazon or Spotify acquisitions of the firm.
Problems With Sonos
In May 2024, Sonos rolled out an updated app to help users get better performance from products and in preparation for future devices. However, the update was marred by bugs and a lack of some basic features, and the company was left with much criticism from users, thus damaging the reputation of the company. The employees’ morale dipped, revenues reduced, and market valuation plummeted from over $5 billion during the pandemic to approximately $1.7 billion currently. In response to these challenges, CEO Patrick Spence and Chief Product Officer Maxime Bouvat-Merlin resigned, and Tom Conrad, co-founder of Pandora and former Snap Inc. executive, took over as interim CEO.
Amazon as a Potential Acquirer
Industry observers believe that Amazon would be a natural fit as a potential acquirer of Sonos. Acquiring Sonos can bring Amazon established experience in high-quality audio products, which can also align with Amazon’s strategy for development and upsizing of its portfolio of devices. And now that Amazon has newly appointed former Microsoft executive Panos Panay to lead its hardware development, it is getting ready to boost the quality of its Echo device lineup with premium audio technology. However, such a move may invite regulatory scrutiny, as in the case of Amazon’s bid to buy iRobot, the Roomba maker.
Spotify’s Interest in Hardware
Spotify, the streaming music giant, has been keen on entering the hardware market but has not been able to do so. Acquiring Sonos would give Spotify an immediate and robust entry into hardware, complementing its streaming services with high-quality audio devices. This integration could make Spotify’s ecosystem better, giving users a seamless audio experience. Being a European company, Spotify might face fewer regulatory issues than its American counterparts in pursuing such an acquisition.
Other Potential Buyers
Apart from Amazon and Spotify, other companies have been mentioned as potential buyers. Samsung Electronics cannot enjoy the benefits of owning the brand Harman, as it has failed to enter the home speaker business. Sonos would be an excellent acquisition for strengthening its audio offerings. Another potential acquirer is Roku, which is into streaming devices and already selling a line of soundbars and speakers. However, it has very little cash, so a stock deal would seem more feasible. Although the likes of Apple, Google, and Meta are well-equipped for such a deal, their existing strategies and previous relationships with Sonos make them less likely to make such a purchase.
Future
In such a scenario, where Sonos is facing some tough times, the possibility of an acquisition becomes a topic of high interest. According to reports, the company’s board is looking at various options, including selling the company, to navigate through the path ahead. The outcome of such deliberations will shape the future of the audio technology industry as consumers and stakeholders watch the development keenly.
