UPDATE: Sonos announced layoffs of 12% of its workforce this week. Are they cleaning up for an acquisition, or merely cutting costs and retooling?
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The financial press is all abuzz with another rumor that Apple may acquire Sonos, the Santa Barbara based maker of smart speaker and multi-room audio devices. Sonos's stock has already spiked 20% on the fresh news. But what does Sonos have to offer Apple?
1. Strong Connected-Audio Product Portfolio
It's no secret that Apple's HomePod was a disappointment. Hard sales data are difficult to find, but estimates from Strategy Analytics put the number at 2.6 million HomePods sold in 2019. For comparison, Amazon sold almost 16 million smart speakers.
Sonos offers an impressive product line, from low-cost smart speakers like the One, to a full home theater solution. Those products could help Apple expand their home footprint beyond the smart speaker.
2. Commitment to High-End Design Quality
If you're looking for the cheapest computer, you don't buy a Mac. And there are cheaper speakers and home theater components than those from Sonos. Both companies care about making elegant and efficient products. The Sonos Move speaker even looks like it could be from Apple:
Or think of it this way: you could say that Sonos is to the high-end connected home audio market what Beats was to the high-end headphone space. There's a similar mindset towards design quality and elegance in their product development. Apple has already proven they can successfully acquire a company like Beats, so there's no reason to believe they couldn't do it again with Sonos.
3. Strong Patent Portfolio
For a company with about $1B in annual revenue, Sonos has built an impressive patent portfolio. They currently have almost 200 granted patents for speaker technology, including 5 new applications that were just published this month. Some of their recent applications include a system for multiple speakers to monitor network strength and adjust which speakers are receivers and which are transmitters of the audio data (US10687110), and a technique for using proximity detection to locate obstructions to speakers (such as walls or furniture), and adjust the speaker performance to prevent distortion (EP3379849).
In spite of those reasons for Apple to acquire Sonos, we should note that Apple hasn't given up on their HomePod products. This patent for a "Loudspeaker Device" was just published last month:
Still, pairing up with Sonos could bring Apple a proven home audio product line and provide additional revenue streams by enabling Sonos devices to interface with iTunes, AppleTV and other Apple services.
There is one big concern that may hold up any serious moves by Apple. Sonos sued Google for patent infringement back in January 2020, and now Google has countersued Sonos. There's also an active US International Trade Commission probe into the complaint. Apple may prefer to wait that out before making any moves.
It will be interesting to see how this plays out over the coming months.