Potential Acquisition of Sonos
Could an offer to acquire audio technology company Sonos be made soon?
Consequences
thanks to the app’s 2024 release and the company’s recent leadership change that saw C.E.O. Patrick Spence and Product Director
Maxim Bouvat-Merlin
leaving last week, speculation has intensified about potential buyers if the company’s board of directors decides to sell.
The company’s recent struggles have driven its market value down to $1.7 billion from more than $5 billion at the peak of the pandemic.
Potential Buyers for Sonos
Bloomberg Mark Gurman identified Spotify and Amazon as the most likely bidders, each offering specific advantages for a potential acquisition.
Gurman noted that Amazon seems “the most natural,” especially after the appointment of former Microsoft executive
Panos Panay
to lead hardware development. He stated that acquiring Sonos could help Amazon enhance its Echo line of devices with premium audio technology.
“Amazon could certainly afford to buy Sonos,” Gurman said. However, he noted that the company could face regulatory scrutiny similar to what
went off the rails during its attempt to acquire Rumba creator iRobot.
As a potential suitor, music streaming giant Spotify may encounter fewer regulatory hurdles because it is a European company, Gurman noted. Acquiring Sonos would allow Spotify to make an immediate entry into the hardware market. In 2021, Spotify transitioned to a hardware company with the launch of a smart car device called Car Thing, which has since ceased operation less than three years after its initial launch due to disappointing market performance.
“Spotify has wanted to get into hardware for a long time, but has struggled to make it happen. Sonos will give them instant entry with a great set of products that can support their audio services,” Gurman wrote.
Other potential buyers include Samsung Electronics, which is finding it difficult to gain traction in the home speaker market despite owning the Harman brand. The acquisition of Sonos could strengthen its home audio offerings. Roku, with its existing soundbar and speaker lineup, could also benefit, though a stock-based deal may be necessary due to Roku’s limited cash reserves, Gurman pointed out.
Bloomberg correspondent added that while larger tech companies such as Apple, Google, and Meta could be potential buyers, they are unlikely candidates given their existing strategies and past relationships with Sonos.
Apple could acquire Sonos for about $2 billion — less than what
it spent on Beats — and the Sonos hardware could bolster Apple’s position with its HomePod and home audio line, Gurman said. “However, I don’t believe Apple will ever acquire Sonos. If Apple truly wanted to build its home audio division, it already has the hardware, software, content, and manufacturing capabilities. It’s just a matter of wanting to do it right – something Apple is already working on,” he wrote.
Rumors of a sale of Sonos emerge as the company continues its recovery from challenges faced, including a problematic software update released in May 2024, which
impacted their product ecosystem. Three months later, the company
fired
100 employees, about 6% of its workforce.
The company stated last week that Spence’s departure as CEO is “unrelated” to Sonos’ fiscal first quarter results, which will be released on February 6, 2025, and for which the company said it “currently provides no updates.” In the fourth fiscal quarter of 2024, ending in September, Sonos’ revenue
fell 8% y/y to US$1.52 billion, which the company attributed to “lower demand due to challenging market conditions and issues arising from the recent app rollout.”
Bloomberg Gurman stated that the best scenario for consumers is for Sonos to remain independent.
Sonos takeover speculation grows, with Spotify or Amazon tipped as potential suitors (report)
