Small speaker is a big move for Sonos
The newest speaker from Sonos, Roam, made its debut April 20 and has the potential to help the Santa Barbara smart-speaker company grow in 2021 and beyond.
Roam is Sonos’ first attempt into breaking into the portable Bluetooth speaker market, a market that is expected to see an annual growth rate of 11.71% from 2019 to 2025, according to a 2018 report by Grand View Research. That report estimated revenue for the portable Bluetooth speaker market at about $1.21 billion in 2018, projected to grow to around $2.6 billion in 2025.
“We have an incredible growth opportunity ahead of us, fueled by the launch of Roam,” Hadley Simmons, manager of product marketing at Sonos, told the Business Times via email. “Sonos customers have registered 32 million products in 11 million homes globally — this represents only 9% of the addressable market across our core markets.”
Simmons added that the hope for Roam is attracting “millions of new customers.”
One of Roam’s selling points is its price point. It will be the company’s most affordable speaker, starting at $169. The company’s first wireless speaker, the much larger Move, retails for $399, while the One sells for $199 and is often part of a home system with at least two speakers. Those systems can easily run more than $1,000.
“I think the challenge always for Sonos was they always had a premium product at a premium price, and now they have a premium product at a low price with Roam,” Brent Thill, a senior tech analyst at Jeffries who covers Sonos, told the Business Times.
The lower price point also gives Sonos the opportunity to tap into younger consumers.
“They are not only going after the old dad at the house, the thinking is they can get the young teenager as well,” Thill said.
Thill said he has also been monitoring traffic on Sonos website and has noted “huge spikes.” Though Simmons would not say how well Roam had pre-sold before its launch, Thill said he believes “the pre-orders have been very good.”
“We are still evaluating and watching but we are excited … and this could dramatically open up the market opportunity, not only here in the U.S. but globally,” Thill said.
John Babcock, a research analyst at Bank of America who covers Sonos, said Sonos “saw this as a market worth approaching” and a way to introduce younger consumer to the brand.
“Right now, Sonos primarily are just competing in the global premium home audio space, but there are more areas for them to target and so that’s where the growth will come from,” Babcock said.
The timing for the new product appears fortuitous. Though other companies, such as JBL and Bose, have had portable Bluetooth speakers on the market for many years, the Sonos release comes as COVID-19 vaccinations are becoming widespread and more people have a reason to go out and actually enjoy the use of a portable Bluetooth speaker. Most of Sonos’ other products must be plugged in; the Move, though wireless, is much larger and less portable than the Roam.
“We’re excited to introduce Roam at a time when people are looking forward to safely getting outside again and will want to take the music with them. Our mission at Sonos — to help people listen better — has never felt more important,” Simmons said. “We designed Roam to give customers a way to bring the Sonos experience with them wherever they go.”
In fiscal year 2020, Sonos speakers generated $1 billion of the company’s $1.3 billion in revenue.
In the first quarter of fiscal year 2021, Sonos speakers made $527 million in sales, compared to $466 million in the same quarter a year ago.
In the first quarter of fiscal year 2021, Sonos said it added a record number of new customers and had a record number of existing customers buying new products.
“They continue to offer a premium sound experience but at the same time make your speakers easy to use and easy to set up and that’s really been what’s driving it,” Babcock said. “This is something that they’ve been doing since they started. That’s what helped them build up the customer base that they have today.”