By Janko Roettgers
Sonos is giving hardware subscriptions another look, at least if a new job listing is any indication. Based on the details in this listing, the company appears to be on the verge of expanding its Flex subscription program, which lets people rent Sonos speakers for a flat monthly fee. Expanding the program could not only help expand the company’s customer base, but also continue to grow it even as consumers cut back on spending due to inflation.
Sonos first launched Flex in late 2019 in the Netherlands, where it has since offered a small number of customers three rental packages starting at €15 ($15.50) per month for a pair of speakers. entry-level and up to €50/month. for a home theater set with full surround sound. As a Sonos spokesperson told me this week when asked about the job listing, “We’ve learned a lot about customer interests through this program and continue to explore how subscription can provide additional flexibility for listeners.”
Sonos began looking for an accounting analyst for Flex a week ago. “The role spans multiple accounting teams and is based preferably (sic) on the US East Coast,” the job listing reads, suggesting that Sonos is considering multiple markets for Flex. Sonos currently generates around 60% of its revenue in the Americas, and just over 30% in the EMEA region.
“Sonos Flex customers will be able to enjoy the Sonos experience at home, without having to invest in purchasing our speakers,” the listing continues. Customers will be able to choose from one of three Flex packages and access product updates, with the job listing promising that the company will “always listen to the latest” of its products.
The company’s Flex trial in the Netherlands was limited to 500 households. Sonos appears to have suspended new signups for Flex at the end of 2020 and has since told visitors to its website that Flex is “currently full.”
Reactions to the trial have been mixed. The Verge called it a “weird flex” and Tien Tzuo, founder and CEO of subscription monetization startup Zuora, admitted he was disappointed. “It’s not a very compelling subscription service,” Tzuo wrote, adding that he wished the company had included additional service features besides device rentals. As he put it, “automatic gear upgrades are not enough anymore.”
However, not everyone is so skeptical of the potential of a Sonos hardware subscription program. “Expanding this rental model to other regions helps build a more stable revenue base, through the addition of recurring monthly subscription revenue,” said Paul Erickson, analyst at Erickson Strategy & Insights, by email. “Honestly, I’d be surprised if they didn’t eventually roll it out to their top 3-5 markets to expand the Sonos customer base available through a more affordable option.”
Like many consumer electronics companies, Sonos has been exploring ways to diversify its revenue streams with subscriptions and services for some time. The company launched an ad-supported music streaming service in early 2020 and added a paid and ad-free tier later that year. It’s unclear whether Sonos plans to combine Flex with access to its paid streaming product, but such a move wouldn’t be unprecedented: Apple, which has had its own hardware upgrade program for years, is reportedly looking to upgrade it. combine with its Apple One service plan.
Service subscription plans are also increasingly part of the consumer IoT. Indeed, transitioning device ownership to rental plans could actually improve the consumer experience, and perhaps even ensure that obsolete devices are recycled.
For Sonos, Flex could also be a hedge against economic uncertainty. Other hardware makers have responded to rising component costs and inflationary pressures with less powerful gadgets sold at or below cost. The speaker maker has less leeway to do so if it doesn’t want to compromise on sound quality, and its service revenue so far is too low to compensate for hardware losses.
Giving consumers a way to get Sonos products without massive upfront costs could be another way to grow the company’s installed base, which reached 14 million homes at the end of last quarter. “The Sonos product line is considered high-priced,” Erickson said. “In order to support customer growth and household penetration growth during this period of rising inflation and consumer price sensitivity, Flex is a more affordable alternative for many people who otherwise would not willing or able to purchase Sonos equipment.”
However, Erickson also warned that the success of a Flex-like service depends on whether a company is good at service. As he put it, “Flex’s long-term subscription growth will ultimately depend on Sonos’ ability to price to each individual market and how well they deliver the service side. part of the equation – timely installation, repair/support and upgrades,”
This story was written by Janko Roettgers, which can be found at www.lowpass.cc
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