Sonos' (SONO -0.55%) latest innovative program is another in a string of winning ideas that ought to have consumers wanting to buy its speakers and should also further pique the interest of Apple (AAPL 1.45%), which some analysts say might want to buy it.
By pioneering a new program that lets early-adopter audiophiles upgrade Sonos' first-generation speakers and components to its latest equipment at a steep discount, the speaker maker ensures that consumers remain within its ecosystem instead of venturing to rivals like Amazon (AMZN 2.23%), which recently released the Echo Studio.
Moreover, if Apple really is eyeballing the high-end speaker company -- as its own HomePod sales fail to ignite interest, forcing it to resort to price cuts to entice buyers -- it should have confidence that the theoretical acquisition could keep it competitive.
Thinking beyond the speaker box
After stumbling out of the gate from its IPO last year, Sonos is on a roll. It seemed to take some time finding its sea legs despite being a leader in high-end wireless multiroom home audio products. Amazon and Alphabet subsidiary Google had flooded the market with cheap, albeit inferior-sounding, smart speakers that many consumers consider good enough for their daily routine.
Yet as both tech giants upped their own quality game, Sonos responded with its own smart speakers, home theater speakers, and stereo components that were more affordable (though still pricey in comparison to Amazon's). Then it seemed to hit its stride in making a play for both its own customers and those it wanted to attract.
First, Sonos introduced a pair of low-cost speakers disguised as furniture, made in partnership with Sweden's IKEA, that are functional, high quality, and appealing to price-sensitive consumers.
It then piloted a speaker rental program in the Netherlands that provides audiophiles a gateway to its technology without having to shell out big bucks all up front. Users can either rent to own over a three-year period, making low monthly payments, or they can lease the equipment in perpetuity, receiving guarantees their hardware will always be upgraded when new components become available.
Now Sonos has introduced its latest upgrade program to ensure its customers don't stray.
On to bigger and better things
The Sonos Trade Up Programme will give owners of its Connect, Connect:Amp, ZP80, ZP90, ZP100, ZP120, or first-generation Play:5 the chance to recycle the components and receive a 30% discount on a newer piece of equipment. If you own more than one item, you get the discount for each new product you purchase to replace them.
To take advantage of the discount, in the Sonos app, select each device you want to recycle to receive your discount. You then have 21 days before your old device enters Recycle Mode, which wipes your data and permanently disables the device, after which you can recycle it.
Because Sonos technology has advanced significantly since its first-generation products, buyers will be getting better sound quality; greater functionality, like voice activation; better reliability; and the ability to use Apple's AirPlay 2 to wirelessly stream content to multiple speakers or to their TV.
And considering rival components may be cheaper, like the Echo Studio, which goes for $199, Sonos is angling to keep the price of its own equipment competitive, like the highly rated but pricey $399 Move speaker.
Chewing up the rumor mill
Sonos has often been the subject of acquisition speculation. Earlier this year, a J.P. Morgan analyst thought that with all the money Apple has collecting dust in the bank, Sonos would be a smart purchase. More recently, following Google's acquisition of Fitbit, a D.A. Davidson analyst suggested Apple should buy Sonos because they naturally align with product design and premium sensibility.
Although Apple reportedly makes more money from its HomePod sales than either Amazon or Google make from their respective smart speakers, despite selling dramatically fewer of them because they command a higher price, it doesn't mean sales are acceptable. Sonos could give Apple's speaker sales a big boost.
Yet whether Sonos stays independent or is acquired, the high-quality-speaker maker is proving it has learned how to remain competitive in a crowded market.