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Sonos: New Product, Messaging To Continue Momentum

7/20/2011 09:15:11 AM Eastern

Santa Barbara, Calif. - Wireless multi-room-audio supplier Sonos is stepping up its efforts to appeal to a broader customer base with multiple initiatives that include the company's lowest priced wireless amplified speaker to date at a suggested $299.

Sonos

Other new base-broadening initiatives
include new marketing messages developed by Greg Perlot, recently appointed as
chief brand and marketing officer, to tell a simpler story "so more consumers
can get into it," said Tom Cullen, co-founder and product development VP.

The developments will help Sonos
maintain a growth pace that saw dollar volume double in 2010 without
dramatically expanding distribution, Cullen said.

The company is already on track to
double sales in 2011, excluding sales that will start shortly in China, he
said.

Also driving company growth has been
the launch of the company's first amplified speaker in 2009 at a suggested $399
and the launch of free iPod, iPhone, iPad and Android apps that turn the mobile
devices into Wi-Fi-based Sonos system controllers. The apps make it unnecessary
to buy a $349-suggested handheld RF controller to choose the PC-stored songs
and Internet music sources that Sonos systems stream wirelessly around the
house to the amplified speakers and to other Sonos-brand wireless receiving
devices.

Eighty percent of new Sonos
purchasers use only an app to control their Sonos systems, Cullen noted.

The iPod/iPhone app launched in
2009, followed by the iPad app in late 2010 and the Android app earlier this
year.

Another growth driver is the growing
popularity of Internet music streaming among consumers, Cullen said. Sonos
tapped into that demand over the years by expanding the selection of Internet
radio stations and Internet music-streaming services accessible through its
system, most recently with the addition last week of Spotify in the U.S., he
said. Sonos systems in the U.S. now access 13 streaming services and thousands
of Internet radio stations.

The company expects the new $299 two-way
speaker, called Play:3, to help keep
the momentum going. Play:3 is available in stores today and joins the larger $399-suggested
Play:5 three-way speaker, formerly called the ZonePlayer S5.

Both tabletop speakers deliver stereo
from a single chassis and wirelessly stream music from the Internet and from
networked PCs when a home's router is connected to a wireless-equipped Sonos
Bridge, which was recently repriced to a suggested $49 from $99. The speakers
also stream music from iPods and iPhones docked in a wireless iPod/iPhone dock
launched late last year at a suggested $119.

The Play:3 is not only less
expensive than the Play:5 but is also less expensive than two other Sonos options
that consumers can use to build a wireless multi-room audio system. Those
options include the $349 Sonos Connect Amp, which connects to an existing sound
system and was formerly called the ZonePlayer ZP120. The other option is the $499
Connect, which features built-in amplifier to connect to a pair of passive
speakers. It was formerly called the ZonePlayer ZP90.

PC-stored songs and Internet music
sources played back through the speakers, Connect and Connect Amp can be
selected wirelessly from a $349 handheld RF controller, from an iPod/iPhone app
launched in 2009, an iPad app in late 2010, and an Android app earlier this
year.

Underscoring the expected popularity
of the Play:3, Cullen said he expects sales of the company's all-in-one
speakers to grow 150 percent in units in 2011 for the second consecutive year
while combined unit sales of the Connect and Connect Amp will grow by 50
percent for the second consecutive year.

In the new Play:3, Sonos incorporates
a pair of 3-inch midranges, one for each stereo channel. The midranges are
flanked by a single tweeter that delivers high frequencies for both channels.
Two speakers can be paired so that one speaker reproduces only the left channel
while the other reproduces the right channel. Most purchasers, however, will
use only one speaker per room. A passive rear-firing bass radiator extends bass
down to 65Hz. Three Class D amps and Sonos wireless technology are tucked
inside the speaker, which measures 5.2 inches by 10.5 inches by 6.3 inches.

The speaker's EQ changes
automatically when it's positioned horizontally or vertically. The EQ also
changes automatically if two speakers are used as a stereo pair.

The step-up Play:5 speaker, in
contrast, is a larger three-way speaker with active 3.5-inch woofer flanked on
each side by a tweeter and a separate 3-inch midrange. It's designed only for
horizontal placement, but two can be paired in a room with one serving as the
left channel and the other serving as the right channel. It is 8.5 inches by
14.4 inches by 4.8 inches.

As it broadens its base with the Play:3,
Play:5, and controller-replacing apps, Sonos is simplifying its story and
broadening its message in multiple ways, Cullen said.

One was to rename its ZonePlayers
from, for example, ZonePlayer S5 to Play:5.

Another is a focus on three key
messages, Cullen said. One is that Sonos streams all the music in the world.
Another is that Sonos puts the music wherever you want. And the third is that
Sonos is bringing back listening out loud (vs. listening through ear buds).

The messages begin appearing today
on the company's web site and are rolling out in emails to customers, media
pitches, and in the fall in the company's consumer advertising. The company has
traditionally advertised on line, in Pandora's app, and in targeted print
publications.

In another change, the company is
adopting a new tagline to go under its logo. The new tagline, "The Wireless
HiFi System," stresses system quality as well as wireless, Cullen said. The
term "hifi" still resonates strongly with consumers, he said.

The old tagline was "All the music
you want all over the house."

The new tagline has begun appearing
today on the company's web site and on Play:3 packaging. The tagline will
appear on Play:5 packaging shortly, and other products' packaging will get the
tagline throughout the fall as inventories deplete.

In an unrelated development, the
company altered its Android app so it can be launched from an Android phone's
memory card, not just from the phone's embedded memory.