Last Wednesday, Sonos said it would lay off about 100 people. In May, the company released an entirely new branded application, which turned out to be extremely unsuccessful, and in the short term alone, repairing the damage from this failure will cost the company between $20 million and $30 million.
Image source: sonos.com
«We have made the difficult decision to say goodbye to approximately 100 team members, representing 6% of the company. This action was a difficult but necessary step to ensure continued meaningful investment in the Sonos product roadmap and position Sonos for long-term success,” said company CEO Patrick Spence. Employees of the departments of marketing, product development, platform and infrastructure, as well as software quality control, learned from The Verge. As of October 2022, Sonos employed 1,844 people. In 2020, the company laid off 12% of its employees (estimated at approximately 174 people), and in June 2023 announced a layoff of approximately 130 people (7% of its workforce).
The next wave of layoffs comes at a time when Sonos will have to spend tens of millions of dollars to eliminate the consequences of the release of a new application – it turned out to be extremely unsuccessful. The app came out in May and removed many important features, such as sleep timers, access to local libraries, and accessibility features. In July, the head of the company apologized for the new product and promised to get it working by the fall, releasing updates every two weeks. Sonos will have to increase spending on app updates, enhanced customer support and discount promotions to restore consumer and partner trust.
The company expects its revenue to decline in the fourth quarter of fiscal 2024 because it will not be able to release new devices until it fixes bugs in the application – Sonos is preparing a soundbar, but it is expected to be released only in October, and the company is already in fiscal 2025 year. According to one version, Sonos may even release an old version of the application – this option has already been discussed at a high level in the company. This was not just a complete redesign of the application – the cloud infrastructure and system player were redesigned; but it was released in a hurry to catch the release of the Ace headphones. Even if the old application were now released, or the two versions were to exist side by side, failure would impact the company’s finances for months, if not longer. And failing to meet the expectations of customers who have been forced to use an inconvenient application for months is damage to their reputation, which can hardly be expressed in money.