Sonos
According to CEO Patrick Spence, dealing with the negative impact of the highly unpopular Sonos app redesign will cost the company $20 million to $30 million in the “short term.”
In May, Sonos released an updated app that angered many users by removing common features such as accessibility features and the ability to edit playlists and song queues, use sleep timers, and access local music libraries. Sonos said it wanted to modernize the app’s interface and make it easier to navigate. While the app initially made certain things faster, such as volume control, the changes sparked outrage among Sonos’ normally loyal user base. In July, Spence apologized for the maligned redesign and said Sonos would fix the app with biweekly updates.
During yesterday’s third-quarter 2024 earnings call, Spence said fixing the app and dealing with related customer outages will cost Sonos millions. The costs come from three main areas – app updates, customer support and winning back customers and partners – and are “necessary to get the ship back on track for the long term,” Spence said.
“We have identified the key issues, have a plan to address them, and are improving our processes and staffing to ensure we successfully execute our action plan,” Spence told investors.
Sonos hired the software’s original developer, Nick Millington, to fix the app. Spence said the updated app’s “modular developer platform, built on modern programming languages,” will allow for faster updates and will eventually enable features the previous app couldn’t support. The executive didn’t go into detail.
Because of the app, Sonos will have to spend more money on customer and partner support. It looks like the company will also be offering financial discounts to win back customers and partners. Spence said Sonos will launch “programs” this quarter and next “to support and thank our customers and partners for sticking with us during this time and to turn their dissatisfaction into joy.”
In addition, Sonos has lowered its fiscal year 2024 forecast due to issues related to the redesign.
Software problems delay hardware launches
The app problems are also having a major impact on Sonos. In addition to the cleanup, which will cost Sonos up to $30 million, the company is also delaying the release of two hardware versions.
Spence said:
The app situation has become a hindrance to selling existing products, and we believe we need to focus on the app before anything else. This means we need to delay the two major new product releases we had planned for Q4 until our app experience reaches the level of quality we, our customers, and our partners expect from Sonos.
Sonos has not specified the devices affected, but there are rumors that Sonos is planning a new flagship soundbar to succeed the Arc.
Taking these delays into account, Sonos expects fourth-quarter revenue of $240 million to $260 million, compared to $397.1 million in the third fiscal quarter of 2024 and $305.1 million in the fourth fiscal quarter of 2023.
