Sonos Earnings, Sonos Unveils Sonos Pro, Peloton Earnings

Hello everyone. Two quick follow-ups to yesterday’s update:

  • The “ESPN in 100M households at its peak” vs. "Netflix’s 74M paying subscribers in the U.S. and Canada" is not a simple comparison. Not only is password sharing rampant with Netflix - making it likely that Netflix is found in more than 74M U.S. households – but it’s also very simple to signup/cancel a Netflix subscription. ESPN was, and still is, only available as part of a $$ bundle.

  • A few people reached out to me to say that they have never had a woven/fabric Apple Watch band tear or split despite years of usage. Such wear and tear for a band specifically marketed as rugged seems odd. I agree with that statement. At least based on my experience, Alpine Loop was far too delicate to be part of the Apple Watch Ultra series. That doesn't mean Apple should move away from comfortable materials for Ultra bands. Instead, they should introduce more rugged bands that begin to provide additional utility to the wearer.

In today’s update, we begin to wrap up our CY1Q23 earnings reviews with smaller companies that remain intriguing to keep an eye on from an industry/competition standpoint: Sonos and Peloton. We will cover Spotify tomorrow.

Sonos Earnings

Sonos was not able to escape the consumer gadget recession. CY1Q23 revenue was down 24% to $304M (vs. $400M last year) as fewer people bought premium speakers in the home. The closest equivalent to unit sales was down by about 30% While Sonos fell victim to a tough year-over-year compare, similar to what Apple experienced in a few product verticals, sell-through demand was also weaker.

Here is Sonos speaker sales on a TTM basis to remove the seasonality associated with the holidays:

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Smart Speaker Competition, HomePod vs. Sonos, HomePod's Most Formidable Competitor (Daily Update)

Hello everyone. There were a few loose ends found with yesterday's update regarding HomePod and the changing competitive landscape. We will tackle those items today. The discussion goes over HomePod vs. Nest / Echo / Sonos. In addition, we go over what Neil views as the HomePod’s most formidable competitor.

Let's jump right in.

Smart Speaker Competition

The smart speaker landscape has seen quite a bit of change in just a few years. The late-2010s saw a wave of speakers enter the market spanning the price and feature spectrums. Companies that entered the space with cheap speakers introduced better-sounding speakers.

We have since seen something of a shaking out process. More niche speakers went on to be discontinued. Apple went through its share of smart speaker strategy changes.

The two big speaker players (Google and Amazon) currently have the following smart speaker product lines:

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Apple Brings Back HomePod, What Happened?, HomePod Changes (Daily Update)

Hello everyone. Happy Wednesday.

We have surprising news: HomePod is back. Earlier today, Apple unveiled a HomePod 2nd generation.

As a long-time HomePod user with 10 HomePods currently in use around my home (in five pairs), the HomePod has been an intriguing product. An Above Avalon Report from 2022 (available here) was dedicated to the HomePod discontinuation. We have a lot to discuss. Let's jump right in.

Apple Brings Back HomePod

In a surprise twist, Apple unveiled a 7-inch HomePod for the second time in six years. The speaker, which Apple is referring to as HomePod (2nd gen), will sit next to the HomePod mini.

In February 2018, Apple launched a 7-inch HomePod for $349. To avoid confusion, we will refer to that model as the original HomePod. After three years of sales, the original HomePod was discontinued in March 2021. At the time, Apple said they were going to put their focus on the HomePod mini:

“HomePod mini has been a hit since its debut last fall [2020], offering customers amazing sound, an intelligent assistant, and smart home control all for just $99. We are focusing our efforts on HomePod mini.”

The sudden (and surprise) discontinuation rubbed HomePod owners the wrong way.

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Revisiting the HomePod Discontinuation, Sonos Earnings, Smart Speakers Getting Squeezed (Daily Update)

The following update was sent to members on August 24th.

Hello everyone. A good way to get back into the swing of things is to talk more about HomePod. The discussion will include a look at the latest earnings report from Sonos and a broader theory of mine regarding smart speakers.

Let’s jump right in.

Revisiting the HomePod Discontinuation

The most recent Above Avalon Report was dedicated to Apple’s HomePod discontinuation, a decision that is still surrounded by many unanswered questions.

In a development that likely deserves its own report, we have seen Apple very recently go down the path of discontinuing a few products (iMac Pro / iPod). While each discontinuation has its own story and surrounding circumstances (the company did embrace a product strategy shift a few years back), the HomePod discontinuation stands out to me as being the most peculiar.

Member reactions to the report came in swiftly. Some agreed with my experience that the HomePod was a very impressive product – one of the most impressive Apple has shipped in years. Others raised concerns with how their HomePod(s) produced a feeling of “never [being] in control of the device.” Additional issues cited included connectivity problems, headaches with needing to restart and update the units, and just an overall uncharacteristic unevenness in experiences. That last item is interesting as the HomePod, in addition to the HomePod mini, are indeed different products when thinking of how they are designed to be used in communal settings while Apple Watch, AirPods, iPhone, etc. are designed for one-to-one settings.

One comment in particular though stood out to me.

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