CEO Patrick Spence estimates that Sonos will have to spend $20 to $30 million “in the short term” to handle backlash following the company’s highly unpopular app overhaul.
When Sonos released an upgraded software in May, many customers became irate since popular capabilities like editing playlists and song queues, using sleep timers, and accessing local music libraries were gone. Sonos stated that it aimed to update and simplify the user interface of the app.
Although the app was initially successful in speeding up some tasks, such as volume adjustment, the modifications infuriated Sonos’s usually devoted user base. Spence announced in July that Sonos would patch the app with fortnightly updates and expressed regret for the poorly received revamp.
Spence stated yesterday on Sonos’ fiscal Q3 2024 earnings call that Sonos will have to spend millions of dollars on app fixes and consumer fallout management. The expenses are ““necessary to right the ship for the long term,” according to Spence, and they originate from three main areas: app updates, customer service, and luring back customers and partners.
Spence informed investors, “We have identified the key bugs, have a plan to fix them, and are improving our processes and staffing to ensure we successfully execute our action plan,”
Nick Millington, the software’s original architect, was brought in by Sonos to make fixes. According to Spence, the “modular developer platform based on modern programming languages” of the redesigned software allows for faster updates and eventually allows functionality that the prior version was unable to implement. The executive stayed away from details.
Sonos has to invest more in partner and customer support as a result of the app. It appears that the business intends to provide financial reductions in an effort to entice former partners and clients back. According to Spence, Sonos would provide “programs” to “to both support and thank our customers and partners for sticking with us through this period and turn their dissatisfaction to delight.”
Furthermore, because of issues arising from the redesign, Sonos lowered its fiscal 2024 guidance.
Hardware Launches are Delayed by Software Issues
Sonos is seeing a knock-on impact from the app issues. Sonos is postponing the release of two pieces of gear in addition to the remediation, which could end up costing the firm up to $30 million.
Spence stated: We feel that the app needs to be fixed before anything else because the current state of the app is impeding sales of our current products. This means that until our app experience reaches the caliber that we, our partners, and our customers expect from Sonos, we will postpone the two significant new product launches that we had scheduled for Q4.
Although Sonos did not name the devices impacted, there have been rumors that the company is working on a new flagship soundbar to replace the Arc.
In light of these postponements, Sonos projects revenue for fiscal Q4 2023 to be between $240 and $260 million, as opposed to $397.1 million in Q3 2024 and $305.1 million in Q4 2023.
