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Sonos Trims Staff As It Redirects Resources To Voice Control & Paid Streaming

Update! Lays off some employees to make “substantial” investment in the 2 areas 3/10/2016 10:15:00 AM Eastern

Sonos laid off an unspecified number of employees and is redirecting resources to bring voice control and enhanced streaming capabilities to its wireless multiroom-audio products, CEO John MacFarlane announced in a blog post.

He cited the success of Amazon’s Echo tabletop speaker, which is equipped with voice control, and the music industry’s accelerated shift to paid streaming over downloads.

Sonos, which is partially owned by KKR, is “committed to running a sustainable, profitable business so that we can fund innovation in these and other areas for decades to come,” MacFarlane said.

 “We’re not chasing short-term gains or answering to impatient investors,” he said. “Rather, we’re making a decision to substantially and confidently increase our investment in the future of music.”

He added, “The short term – and very difficult – consequence of this decision is we’ve had to make some changes to our team.” The company is “in the process of letting go of some Sonos employees who have played important roles [in the company].”

The changes come at a time when analysts see growth slowing in the wireless-speaker market as more companies enter the market.

The two key areas that Sonos is “leaning into” are paid streaming services and voice control, MacFarlane said.

The Amazon Echo, he said, “found a sweet spot in the home” and represents “the first product to really showcase the power of voice control in the home. Its popularity with consumers will accelerate innovation across the entire industry.”

For its part, “Sonos is taking the long view in how best to bring voice-enabled music experiences into the home,” he continued. “Voice is a big change for us, so we’ll invest what’s required to bring it to market in a wonderful way.”

The changes are “the right thing to do for Sonos as we look to the future,” he added.

As foe paid streaming services, MacFarlane said Sonos pioneered the integration of paid streaming services early on, but the launch of Apple Music “helped drive a dramatic acceleration of paid music subscriptions. Because of Apple, “the entire ecosystem – labels, artists, management — began to embrace and advance streaming all over the world.

Now, this shift is irreversibly started, and everyone in the ecosystem is adjusting to a world of streaming services,” he said.

As a result, Sonos is “doubling down on our long-held conviction that streaming music is the dominant form of consumption now and in the future,” MacFarlane explained. “We believe that listeners will grow increasingly dissatisfied with the solutions they’ve cobbled together for listening at home.

The company is “going to focus on building incredibly rich experiences,” MacFarlane added. “This is a significant long-term development effort against which we’re committing significant resources.”

Additional comments: A spokesperson declined to disclose the number of employees laid off.  “We’re not commenting or providing details on the number of Sonos employees who are leaving the company except to reiterate that we see the path ahead of us clearly and are making sure we have the skill sets and talent in place now to move forward,” the spokesperson said. “Nor can I provide specifics regarding divisions or positions impacted by the reduction in force.” 

The spokesperson also hinted at Sonos integration with the Amazon Echo to add voice control of Sonos systems. “Many people are wondering if Sonos and Amazon Echo/Dot will integrate,” he said. “Seems like a pretty good idea.”

The spokesperson also said Sonos has no plans to create its own music service. ”We have more than 60 streaming services on Sonos today and will continue to add new ones to enhance our owners’ experience and access to music. Our one job is to make it easy to listen to any and all of these services out loud in every room of your home, in whatever way our owners desire, including but not limited to voice control.”

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