Fabulous New Article: The New Sonos App, Three Months Later

Wow.  Andy has written another excellent article.  Looks like Sonos are busy screwing the (speaker side) firmware as well as the (user side) app.

I still can’t understand why Sonos have not just abandoned this new architecture - as I said in another post I think they are just flogging a dead horse by trying to make it work.  The only logical conclusion is that it is either simple pig-headedness, or not understanding the sunk-cost fallacy.

Not mutually exclusive. In fact, the second explains the first. “The 2024 SONOS Disaster” will certainly be a case study in future MBA lessons on sunk cost. At this point, the only question is whether the lesson will need to start with a description of what SONOS is or what it was.

A really great article @controlav 👍🏻

Indeed, and I suspect many tech blogs, sites etc. are busy preparing their best buy guides for the run up to the holiday period, and if the likes of the New York Times are already flagging that Sonos can no longer be recommended on the back of the atrocious new software, I’m pretty sure they won’t be alone. 

Sonos will go from being the gold standard to the laughing stock. 

I’d imagine by now that sales staff in stores are getting fed up with disgruntled users returning Sonos gear as not working so will probably for their own sanity recommend other systems where before Sonos would have been the go to sell… 

4th quarter sales will be very interesting, esp. if others follow NYT/Wirecutters lead… 

The damage may already be done, and with basic features now not slated until almost Dec. that could be 7 months of pain inflicted on users. I hope big investors are asking some serious questions around certain board members competence. 

Hi @controlav, during today’s earnings call, Patrick Spence specifically called out “speakers disappearing from customers’ systems” as one of the new app/new firmware problems. I mention this as I believe it is the first corporate recognition that “disappearing devices” is a problem. The fact that it is on their radar—and quite visibly so, as evidenced from it being highlighted—tells me that they are digging into it.

I’ll post a link once a transcript of the earnings call is online. No exaggeration, most of the call was about the new app rollout and its impact.

There was about a 10% stock price fall in aftermarket trading.

Yeah @buzz, the stock was down as much as 13% during the earning call. Sonos disclosed that FY2024 revenue would fall short of expectations due to the new app rollout, from (a) lower sales of existing products and (b) delayed introduction of two new products that are otherwise ready to go. They also disclosed an unforeseen $20-30M in costs—no details were given, to the frustration of the analysts—associated with fixing the new app and new firmware.

In case anyone missed the call, here’s the transcript:

https://www.fool.com/earnings/call-transcripts/2024/08/08/sonos-sono-q3-2024-earnings-call-transcript/

Thanks for the link to the transcript, @Rhonny. Here are a few interesting quotes … puh-lease do not interpret any of this as piling on ...

It's important to note that this was really a redesign of the entire system, not only the app but also the player side of our system as well as our cloud infrastructure.

Important point: the “new architecture” made significant changes to cloud infrastructure, device firmware, and of course the mobile apps. Many times on these forums we overlook the first two.

For some [customers], this meant existing speakers missing from their Sonos systems, while others saw latency issues or errors while setting up new products.

Good to see the company recognize two of the more vexing issues. I suspect these hit the company especially hard, manifested by above normal customer returns.

The app situation has become a headwind to existing product sales, and we believe our focus needs to be addressing the app ahead of everything else. This means delaying the 2 major new product releases we had planned for Q4.

Two factors here that will negatively impact revenue.

One of our Board members, Tom Conrad, has over 30 years of experience in software engineering, and Tom is helping us ensure our software efforts are on the right track as well as providing another expert perspective.

While many will view this as a token move, any time a board member gets involved it is a big deal.

We are enacting programs this quarter to both support and thank our customers and partners for sticking with us through this period and turn their dissatisfaction to delight. These programs will run across Q4 and Q1. We expect these investments will come at a cost in the range of $20 million to $30 million in the short term but are necessary to right the ship for the long term. 

This is an new unanticipated spend that will negatively impact earnings.

We expect Q4 revenue in the range of $240 million to $260 million. The challenges with our app have had a twofold impact to our Q4 revenue expectations: one, lower sales across our portfolio due to app launch issues; two, the decision to delay the launch of 2 major new products.

Significantly lower Q4 revenue guidance. For reference, 2023 Q4 revenue was $305M.

As a result of the reduction to Q4, we expect the revenue in the range of $1.503 billion to $1.523 billion for the full year.

Lower annual guidance. For reference, trailing 12-month revenue was $1.544B.

“Programs to thank our customers for sticking with us” sounds to me like significant price promos for existing customers (no wonder if will all add up as part of the unanticipated spend). 

Hmm. I wonder whether the level of reward will be proportionate to the all-time ranking on the Sonos forum..?? 😉