Yahoo Finance Sonos’ Highly Anticipated Move Into Headphones Hits Software Snag
(Bloomberg) -- Sonos Inc.’s ambitious foray into the headphone market has hit a software snag, delaying production of the device and its release date, according to people with knowledge of the matter.
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The setback — tied to how the wireless over-ear headphones connect to Wi-Fi networks — means the company now expects to begin selling the product in the first half of June, a month later than previously hoped, said the people, who asked not to be identified because the plans are private.
The company has been building prototypes at Luxshare Precision Industry Co. in China and will mass-produce the headphones there. But a key stage called production validation testing, or PVT, was halted due to the bug. The PVT step normally occurs two weeks before mass production.
Sonos is working to resolve the problem and still expects the headphones to be a blockbuster new product. It aims to produce between 650,000 and 1 million units over the next year to fulfill demand, the people said.
The company is looking to price the headphones at $449, competing with others at the top of the market. But the release timing is still fluid and could shift again depending on how the snag is resolved.
Read More: Sonos Readies $400-Plus Headphones to Rival Apple and Bose
Chief Executive Officer Patrick Spence is betting that the headphones can help reignite growth at the company, which is best known for its sound bars and speakers. Sonos’ sales have stagnated in recent years, and his comeback plan involves getting into a number of new categories. But it means going up against big rivals, including Apple Inc., Sony Group Corp. and Bose Corp.
Investors have grown more optimistic. The shares are up 11% this year following a flat performance in 2023 and a 43% plunge the prior year. On Tuesday, the stock briefly went negative after Bloomberg reported on the headphone delay. The shares rebounded to a gain of almost 1%.
The company, which has been working on headphones since at least 2019, plans to sell the device in black and white options — similar to the color choices on its current products. The headphones are designed to work with existing Sonos devices, including smart speakers, and stream audio directly from TVs and various music services.
The Santa Barbara, California-based company is eyeing other new categories as well. That includes a previously unreported large speaker for use at parties, according to the people. It would compete with the PartyBox from JBL, a popular speaker maker and subsidiary of Samsung Electronics Co.’s Harman, and launch in 2026.
The Sonos headphones, codenamed Duke, will be the biggest test yet for Spence, who took the helm in 2017. He hasn’t officially announced the plans but has touted the imminent arrival of a new device.
“We now turn our undivided attention to the launch of our highly anticipated new product, which we will announce and ship in Q3,” Spence said during an earnings call this month. The company’s fiscal third quarter runs through June.
“This launch will give us a foothold into a new multibillion-dollar category, expanding the number of categories we play in from five to six and further diversifying our business,” he said.
Sonos is planning to eventually offer the headphones in all its major markets and will add new retail partners to help sell the device. The company is also discussing a second-generation model internally and exploring the idea of an in-ear model — codenamed Disco — aimed at Apple’s AirPods. The latter may also connect to Wi-Fi for streaming. Most headphones typically only use Bluetooth.
Read More: Sonos Plans to Cut Jobs as It Prepares Push Into Headphones
The headphones have taken a circuitous route to market. People with knowledge of their development say Sonos originally planned to release headphones codenamed Trident in mid-2021, but Spence shelved the project at the beginning of the Covid-19 pandemic in 2020.
To get ready for the headphone launch, Sonos is planning a revamped mobile app codenamed Passport. That will allow users to more easily set up and control Sonos products outside of the home. But the new app has faced software-engineering challenges as well and probably won’t launch until May. It was originally planned for March. Sonos wants to release it at least a few weeks before the headphones debut.
Sonos is also working on a television set-top box, new TV sound bars, an upgraded portable speaker and fresh amplifiers, Bloomberg has reported. But the set-top box — a rival to Apple TV and Roku Inc. devices — has hit some delays as well, with the company now expecting a launch around August 2025 instead of as early as this year.
(Updates with latest on shares in seventh paragraph.)
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