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Sonos: New Client To Expand Customer Base

10/22/2009 11:50:21 AM Eastern

Santa Barbara,
Calif. - Sonos, the wireless
multizone-audio system supplier, sees its latest tabletop client as a way to
expand its customer base and eventually its dealer base, said company co-founder
Thomas Cullen.

SonosThe $399-everyday ZonePlayer S5 is the company's first one-piece
tabletop client with built-in amplifier and stereo speakers. Like Sonos clients
that connect to separate passive speakers or to existing stereo systems, the S5
wirelessly streams PC- and network-attached storage (NAS)-stored music and, via
a networked broadband modem, Internet music sources.

The S5 will be promoted on packaging and in advertising to iPhone
owners who will be able to use a free downloadable app on their iPhone to send
commands via a Wi-Fi network to one or more S5 clients or Sonos' other clients.

The compact S5, now due in early November, is positioned as a
more affordable solution for iPhone owners who won't have to spend $349 on
Sonos' $349 wireless-RF touchscreen controller, $499 amplified clients, $399
unamplified clients or the audio components needed to connect to those clients.
Many consumers, Cullen said, are aware of Sonos but have held back on
purchasing because of price or because they don't want to set up separate
speakers or complete sound systems in various rooms.

The S5 is also positioned as a solution for existing Sonos owners
who might want to add music to room, such as garages, where separate speakers
or complete stereo systems are impractical. Existing owners also might consider
an S5 for a room, such as a kid's room, where a more affordable option is preferred,
he said.

For the S5 launch in early November, the company will target its
current dealer base of A/V specialists, custom installers and select online
stores, including Crutchfield and Amazon. But in the second quarter of 2010, the
company will target the iPod-docking speaker-system sections of high-traffic
sales floors, Cullen said. "New channels won't come until the second quarter
because demand is high, and we want to supply our existing channels with enough
product," he explained.

For the docking-system aisles, S5 packaging will target iPhone
owners because "until now, the iPhone customer did not have a good all-in-one dock
solution," Cullen contended. A docking speaker system "is a social experience,"
he explained, "but if you dock an iPhone, you can't make a call without turning
off the music." With the S5, however, an iPhone user will be able to take a
call while the S5 continues to play music, he said.

To support high-traffic sales floors, the company is packaging
the S5 in a four-color carton, whereas other Sonos components have been
packaged in corrugated single-color boxes because they were destined not for
high-traffic retail locations but for "high-touch channels," Cullen said. Sonos
will also invest in self-contained displays with video presentations to explain
the product on fast floors, he added.

Although Sonos wants to expand its customer and dealer base, the
company continues to enjoy strong growth, Cullen contended. The company's unit
and dollar sales have continued to grow throughout the recession, though at a
slower rate, in the U.S.
and worldwide.

In the first half, Sonos sales in the U.S. and worldwide grew 25 percent
in units and a little more in dollars compared to about 50 percent two years
ago, he said. In the second half, he expects sales to be up 50 percent. Sonos'
fastest growing business this year, Cullen noted, has been the custom market,
where installers are pursuing retrofit multi-room-audio installs because of the
implosion in new-home construction.

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