The all-new Sonos Ace headphone has flopped with the Company only managing to sell 10% of what they forecast with that 10% also including freebies and samples for journalists.
Multiple sources are now claiming that the US audio Company that pioneered networked audio are in trouble ,with a plan to launch a set top box this year, up against the likes of Hubbl, Google Chromecast and Amazon’s Fire Stick now put on hold with questions being raised as to whether it will ever be launched due to the problems the Company is facing.
Initially Sonos projected that the new headphones that attracted mediocre reviews, would generate $100 million in additional revenues for the brand, now the Company is looking at a new strategy that could well see the Company try to have a crack at the ultra-premium headphone market.
Internally the Ace headphone launch was seen as the golden product that would prop up falling speaker sales which have been impacted further this year, following the disastrous roll out of a new Sonos app that nobbled speakers and caused much angst among Sono’s speaker owners.
While Sonos claims to have most of its app problems behind it, multiple reports are emerging that suggest it may have now an even bigger problem with sales across the board tanking.
Mark Gurman of Bloomberg News claims that “Sonos is struggling to sell Ace headphones.”
The big plus for the business was that there was a big buy in by retailers and that stock is now in the Channel with retailers having to wear the costs associated with a poor sell through.
Retailers in Australia including West Coast Hi Fi, Melbourne’s Sight & Sound are already discounting the $695 headphones down to $595, JB Hi Fi is still ranging the headphones at $699.
The sell in volume was included in the Companies Q3 results which is why their latest revenues showed a slight increase.
According to manufacturing sources Sonos had initially planned to manufacture between 900,000 – 1,000,000 units per year.
Now instead of 2,500 units a day the company is struggling to hit 250-unit sales a day resulting in their latest product offering only delivering US$10 million in revenue.
Currently Sonos is delivering around $1.6 billion in revenues however this is tipped to fall due to problems with their app which has turned people off buying a Sonos speaker.
The loss of US$90M in revenue from headphones will be on top of the US $100 million fall in 2023 compared to the previous year.
In an effort clear stock, the business is set to cut prices according to sources with cuts of over $100 tipped.
Despite the failure of the Ace headphones management are believed to be working on the release of another premium headphone that is currently codenamed ‘Roundhouse” that could be called Ave Ultra despite the failure connotations associated with their current Ace headphone.
The difference will be the inclusion of their Sound Motion technology which they acquired after buying Danish Company Mayht.
The price being banded around for the Ace Premium headphones is US900 or over $1,600 in Australia.
As of now Sonos has still not delivered a full working app despite two months of trying to fix the bugs.
The Company is claiming that they now have “90% of the new app’s missing features, with further additions “on the way”.
As one observer said, “It’s incredible to think that it’s taken the company months, to restore 90% of the functionality of its own app”.
Some analysts claim that Patrick Spence, Sonos CEO should be sacked, and a new CEO appointed to get the business out of the mess they are currently in.
One observer concluded “CEO Spence may be pulling back on the control stick, but this plane looks like it is still speeding nose down”.
