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Today I'm talking of Tom Conrad, the CEO of Sonos. Tom and I have known each other for a long time. He was the CTO of Pandora, the VP of Product at Snap, the Chief Product Officer at Quibi, and he was on the board at Sonos during the disastrous 2024 app redesign that threatened to crash the entire brand. Tom took over his interim CEO to write the ship during that period, and then took the permanent role just about a year ago.
And so here I'm saying he thinks Sonos is fully out of that mess now. And onto its next chapter with a huge product and platform launch called Sonos27. I mean, come on, you all listen to the show. That is the most decoder-bait decoder stuff imaginable.
I've been dying to have Tom on the show to talk about how the board decided to move on from previous CEO Patrick Spence, how he diagnosed the issues inside the company, and what decisions he made to fix them. And in Sonos Surprise, those fixes involve a lot of big changes to the company's structure, to its product lineup, and how Sonos fundamentally thinks about itself and what its product really is. That's that new platform, Sonos27, which you'll hear Tom call a new foundation for the company that makes every Sonos product work better as part of the system. There's a lot here, including how AI systems can work across the system, the idea of having a mesh network of little computers in your home disguised as speakers, and of course the testy relationship between Sonos and Google, which means Google's Gemini system is currently available in Sonos devices.
And of course, Tom and I talked about Wheezy Smart Home standards, because I'm a smart home nerd and I simply cannot help myself. But to his credit, Tom was willing to get into it and nerd out with me. And I think this conversation is pretty fun because of it. So no CEO, Tom Conrad, here we go.
Tom Conrad, you're the CEO of Sonos. Welcome to the coder. Thank you. It says, they have say, it's so great to be here.
I am just going to say, finally, I've been asking you to be on the show for at least a year, if not before. You and I have, I think the first time I met you was in the back of a car at CES when you were at Pandora. Sorry. 100 years ago.
100 years ago. We were children. We were little babies. The kids sold it by a human driver.
That's how far I'm going. Great. And then you took a turn to a quickly and I talked through that. And now you're at Sonos.
As you know, I'm a huge fan of Sonos. We had your predecessor, Patrick Spencer. She spent so many things have happened. So I just want to start at the very beginning of this.
You're about a year into being a permanent CEO of Sonos. You have a bunch of news to announce. Just tell us what you think Sonos is today. What is your conception of this company?
When I came in the door, one of the, my earliest observations was that the company sort of behaved like it was a 100 percent hardware. But we're really 100 percent hardware and 100 percent software. And you know, you get either one of those, even a little bit wrong, and the impact is tremendous. Well, how does that show up like really day to day?
It was about returning the company to the idea that Sonos doesn't make these individual products, but we really make one thing. We make the Sonos system. And it all has to hang together in a cohesive and interesting and valuable way, or we're just not doing the work. It's been a bunch of basic blocking and tackling, of course, both operationally and in the work that we're doing in the product family.
But at the highest level, returning the company to the idea that we are a system for audio and the home has been the the highest level kind of mantra. When you say coming to the company, do you mean as a board member or as the CEO? Let's start this starter pistol in January of 2025, 18 months ago, when I stepped in first-time interim CEO and then was lucky enough, six months later to be asked to take the job more permanently. The reason I asked that question is you obviously two different views of the company in different roles, but we did have former CEO Patrick Spence on several times, and he said something very similar to me when he first took over.
Sonos was stuck in its ways, it was really focused on very, very slow iterations of hardware. He tried very hard to push the metabolism of the company to be much faster. He talked about that very openly with me. That led eventually to what I think is a moment of true crisis, the app launched, it was kind of a disaster.
The system stopped working. That's when you came in to write the ship. Tell me about that gap. You came in, you said this company thinks it's a hardware company.
That's kind of what your predecessor had been saying, but it went sideways in big, meaningful ways. Tell me about that moment and why you think it was the same conception even when you came in. As you describe, I've been involved in the company going back almost 20 years. We brought Pandora to Sonos in 2007, I think so.
We got to get to know the company as a partner before I got to know it. As board member came onto the board in 2016, right as Patrick became CEO. From the vantage point of a board member, I got to participate in Patrick's chapter. I guess the way I would characterize his high order thinking about the company in those early days was that as you described, he wanted to turn the company into a product execution machine with emphasis on hardware products, NPI, new product introductions.
In the chapter before him, it sometimes was years between new Sonos products. He said, look, we're going to make a company that knows how to ship a couple of great new products a year. He did that. The company has reliably shipped a couple of great hardware products every year.
We're close to a decade now. Sometimes when you energize an organization around an idea, there are unintended consequences. I think one unintended consequence of that framing was the company got very focused on the individual products one at a time. Even as a board member, I received Rome as a portable speaker with a certain amount of battery life and water proof and Bluetooth connectivity.
I didn't really think about it as a member of the Sonos system. Even the software work that we did and every product that we make has a tremendous amount of software effort innovation that goes into it. Even the software that we made was very focused on the individual APIs. What can we do and software to differentiate move to from other speakers in that category?
What was hard to do was hard to prioritize in the company was horizontal slices of software experiences that benefited all of the platform. In a way, I think some of the debt of that accumulated. The company thought that the antidote was to recreate the app experience. As you know, we made a bunch of mistakes in that moment.
I'm really proud of the fact that I think we're well beyond that chapter now. But we could have been much more thoughtful about how to qualify that product in the real world. We could have been much more thoughtful about how we rolled it out to customers. We could have been candidly examined the original impetus in the first place.
That was very Sonos motivated. We'd like to put the app on a modern architecture to make us more nimble. In my chapter, it's on us. I'm really trying to bring it all back to have to be focused on the customer first.
I'm so inspired by talking to people on social and my inbox and people in the industry like you about how do we show up and solve the real problems that are happening in real households. I'm so excited about the things we're going to talk to you today because I didn't really answer too many of those questions. I do. If you're a listener, you know, I'm familiar with Tom.
The man's on threat is doing customer support every day. I actually am like, I should not take advantage of this. I hold myself back from asking for direct customer support all the time. Anytime.
Anytime. The way that you can tell it's actually me and not our Cracker Jack social team is that I often let a thread die before I should or fail to follow up with someone. If we were executing perfectly on that, you would know it was fake Tom, but it's real Tom and I do it when I can, but sometimes perfectly. At least it's not AI avatar.
Tom, that's that's when we know it's going to get a thread. I know you're going to cut a fence. I'm going to make you sit in this for just one more moment because I find all of this to be really fascinating. The app shipped the feedback was immediately and intensely negative.
Many, many things are broken. speakers weren't working at weddings. This is a time of massive crisis. The company goes to resolve it, but then you're on the board and it's clear that there's going to be a leadership transition, right?
Patrick, yes, to go and when you're in a new CEO, you're going to be in from CEO. Tell us about that process. Very, very few people will ever be in that kind of process or get insight into that process. What happened?
What were the steps? I guess you start by saying that the last thing is a board that you wanted to do is to remove a CEO, particularly one who had as many successes as Patrick. But I think as we looked at the company's progress, recovering from the app crisis, and frankly, the tenor of the conversation inside the company, we just decided that for this kind of step function improvement that we needed on some of these dimensions, we had to make some changes in leadership and that included a CEO change. It was a wild experience for me because I'll tell you at no point in the last decade leading up to that day in January.
I imagine that I might end up the CEO of Sonos in the process. The board asked if I'd be willing to step in on an interim basis. It was an easy yes for me. It's a cliche, but I'm a customer and I love this product.
There was a sonos move in the room and my daughter was born. You talked about weddings. I was watching friends and colleagues on the internet frustrated by their experience. I wanted to come in and fix it.
And of course, as a board member, I felt some real culpability in it. It's the real little chance to come in. When you're an interim CEO, really the assignment is to keep the wheels on. And the assignment at Sonos specifically was to write the ship.
And so during the period where the board was doing their comprehensive search for the person that they would also might decide was the right choice for the company. It was really easy for me to show up and just do that hard work of trying to get the company back on track. And while I never imagined that I would land in the seat, I feel so blessed that it happened. I do love this job and continue to love the company and the team.
So excited about the things we're doing for our customers. Very few people are going to get to interview the CEO sent us. Imagine at some point you went from being in from CEO to wanting to be the permanent CEO. What was that process?
Did you write a memo? Was there a pitch deck? What was this? There were a couple of pitch moments.
The board asked me completely reasonably to engage in the process of applying for the job in the same way that all of the other talented candidates that they spoke to engaged. And so I took a personality test. I waited with the letters. Like, yeah, one of the letters, thanks, you're they wanted to know what they were getting.
Do they know that that is basically just like astrology? Like someone should talk about it. I presented more than once in my vision for the company. I had the incredible advantage of being inside the four walls of the company and deeply understanding what was working and what wasn't and the things that we needed to do to get to this next chapter.
That was a it was a period of intense, intense work for me and everybody around me at the company. And more than a little anxiety about how it was going to turn out. It was so fun though to get the call and then to just immediately be able to pivot at least a fraction of the work from the entirely tactical to the much more strategic to begin to talk about what kind of company we get built together in this next chapter. You know, when it was not to be on the permanent CEO, even when you were the interim CEO, my reaction was, oh, this makes sense.
And maybe it was to use like a football analogy, football teams hire defensive head coaches and offensive head coaches, right? And they come from that one side of the ball. And it was just obvious, oh, this company needs a software CEO. And then Tom is a software guy.
You're describing obviously it's both, right? You've got to part run software together. But I just that was the light that went off in my head. Oh, this is a software person cutting in to fix a big software problem.
Is that how you saw it initially? My career started selling personal computers in 1986 or something at the original micro center. Have you ever been to a micro center? It's like one of the few where you had big box retailers.
So the original micro center to Columbus, Ohio, and 16 years old, I walked into the CEO's office and said, I won't work here. And so for my earliest days, I was sitting with early adopters of personal computers and watching their struggles to understand the technology and put it to use in their life. So I became an engineer and a product designer out of a desire to help people learn to use these products. And that's really what's motivated me through my entire career.
How do I help teams make great experiences? And so while it's true that I'm a software person 35 years in the business, my identity really is sort of as a product designer. And I'd like to think that the board imagined that yes, they needed a software person, but they needed somebody who could holistically look at the opportunity across hardware and software and help the team get there. You appear to be through it now.
There's a big stack of announcements here, including MCP integration. I've got a lot of questions about all that. When you became the permanent CEO, 18 months ago, you said you immediately shifted to strategic. What brought that into focus for you?
Oh, this is actually a software platform with our work components. Was that instinct? Was it research? Was it I'm getting through this process?
And that is becoming revealed to me? How did that work? I think by disposition, I'm a fairly right-bipprained person. And I think that it's an intuitive feeling, whatever creative words are, not as quantitative.
But my first job out of college was Apple. And I think that from the early days when I was there, we talked about the intersection of the arts and humanities and the sciences. And I think one lesson of my career has been that you really do have an obligation to bring a quant and a qual assessment to most things that pass your desk. And so the development of our strategy was very much like that.
Yes, there was an intuitive sense about what the right answer for someone was built up from my experience as a customer, by observing our customer, talking to them through the years. And a piece of that is a perspective about where a puck is going. But I do have access to piles and piles and piles of data about how our products behave in the real world, how our customers interact with them. They use what they don't use.
And lots of people around the organization who can bring that quantitative framing. And I think one advantage I had over other CO candidates was that I could bring some of that horsepower to bear on the story that I shared at the board about my vision for the future of the company. You've made some changes. It's time for the decoder question.
You have restructured the company. I mean, if you rounds of layoffs, how big is it on us today? We're about 1500 people. And how's that structure?
The company that I stepped into was divided into business units. So we had a team that was focused on home. We had a team that was focused on professional opportunity. A team that was focused on home theater and so on.
Something he said for that approach at a certain scale, my appraisal was we were subscale for the inefficiencies that creep in. We have the sort of almost guaranteed duplication of effort across the silos. And what's more, if you imagine that the product is really the system, the idea that your portable team sits far away from your home theater teams, it's far away from your plugged in speakers team is almost surely going to run counter to the progress that you're trying to motivate. And so very quickly within three weeks of my arrival, we reorganized the company into a sort of functional model.
My leadership to team teams A, of course, we have a finance organization, legal organization, sales organization, a marketing organization. But the product team now shows up as represented by hardware, software, and global supply chain operations. So leaders across each of those things. And what that allows us to do is to assemble cross functional teams or matrix style to invest in the initiatives that are of the highest priority to our customers into the business in any given moment.
And we can we can flex that up and down inside to side as our needs change. We might for an interleave very focused on this part of the portfolio over here. And then we might be able to move to focusing on a different corner of the portfolio. No one has to get a new boss and people can sort of smoothly move from these things and get new opportunities to learn and just strengthen a much more appropriate organization structure for our current state stage.
You're describing the shift from a divisional structure to a vastly more functional structure. Yes, that's that's right. Everyone comes up and there's one big product meeting. You obviously make a lot of software I've described you as a software CEO.
It seems like the software industry is in a moment of existential crisis. But how software is made about what a product manager versus an engineer versus a designer do. Are you still in the classic structures of building software? Is it a completely up and where you're doing?
No, I, you know, we're as deep in this as anyone. And what's been really fun for me over the course of the last year is to watch the software engineering team go from awful skepticism to pretty deep embrace, if I'm honest. And some of that is on the backs of just how dramatically the tools have evolved over the course of the last of the last 12 months, certainly, you know, I think almost everyone in the industry went home at the holidays and still end of 25 coming into 26 and came back just kind of got smacked by how much progress the frontier labs were making on the agenda coding and it's been a real accelerant for us. And as complex as this transition is, I'm really excited about being able to help our engineers navigate what's a pretty fundamental sea change in the way that this kind of infrastructure gets built and it's fun to get to be a part of that.
Did you break up the sort of classic PM designer engineer triad or is that still the core building block? We still have all three, but, you know, it blurs as particularly as the designers and the product managers, you know, can be prototypers at a really high level with incredible efficiency. It's exciting to see how quickly they can communicate their ideas down and the medium that just didn't exist at all for that a year ago. That brings me to the other decoder question.
How do you make decisions? What's your framework? I don't think it's just one framework to every decision and so we talked about, for example, product decisions as an idea moves through its lifecycle from it's like, days is like a really little sapling that you have to like kind of care and tend to through final mass production for hardware object and out into the channels. I think how you think about decisions are different.
So in the in the earliest of days, I really tried to protect the creativity of the company and to not let the antibodies of doubt and critique sort of erode an idea before it's had a chance to express itself in a way that anybody could get excited about, which means creating room for risk taking and creativity and qualitative assessment and prototyping before you get to the details of the business case and the hard trade-offs that you make on a journey from an idea to something you can actually ship. But of course, as the programs roll along and they take on more and more financial investment and organizational risk, it's more and more people aggregate into the product. You become I think just naturally much more sort of quantitative in your analysis of the decisions and you ask the teams to bring a really thoughtful, detailed sort of description of the puts and takes in the risks associated with it and use that to help you make your decisions. But maybe over top all of that, you just have to hire great people.
I mean, you just do and you have to put them on teams that are appropriate size for the task at hand. And I think it's very, very difficult for any CEO or any leadership to make great decisions that people who aren't bringing the ideas themselves aren't great. And so I suppose it starts with the right people in seats. There is an ask that question that way is, I think maybe the decision you made that is most emblematic to me of we're going from a divisional structure with individual P&L's to more functional structure and thinking about the platform as a whole was the decision to kill a product that we was called Pinewood, which was a set-top box, integrated all streaming services as well reported by former Virgin Porter, Chris Welch, who's now Bloomberg.
The thing that really struck me about that was if you had a division that was focused on Sambars, the only place that that division could go was to go compete with Roku. And all the reporting that we had before suggested that the Sambar division was growing because the attached rate for Sambars with new TVs is like 100%. Everyone knows the speakers and TVs are bad. It's a great business and we're for sure the best product I got going.
And so if you want to grow, the big thing, you're going to be like, how do we grow? I got to beat Roku. And now you're just off doing that. And you come in and you just ended that.
And I thought, oh, this is not just a decision to end a product line. This is a decision about the strategy of the company. Because if you're going to go compete with Roku, you've got to be a different company. That's my view of it.
Is that how you saw it? It's like so many things like these decisions do have more than one dimension that you evaluate. A big part of that decision candidly was that we were spread too thin across too many things. And I didn't believe that we could be exceptional at all of them.
I wanted to return us to focus on the thing that allows us to be most differentiated in the competitive set and that's the incredible systemness of the product and the audio experience that we can deliver and attending to the time was a very long list of things that our customers are explicitly asking us for. If we were actually, computally, if we were working on a set-top box in that moment. Another thing that I might have wondered about is, is our desire to make this particular product? Does it come from our customer or does it come from some sort of internally sourced sense of business opportunity?
I think companies get in a lot of trouble when the thing that comes first is the model and the thing that comes second is the product. I certainly feel a sense of obligation to constantly evaluate new business opportunities for the company, business models for the company. Sure. But I want them always to start from a place of like, what do we really see in the market for customers?
I'm not sure that they were saying, we want a high-end streaming box that is somehow the lovechild of a Hamiltonian or a other child. Although that love child, I would be very worried about that lovechild. Why does this product have 200 gigs of storage for no identifiable reason, but also show me ads at all times? What's that about?
Where at the turn? You came in, you restructured the company, you identified a new thesis for the company. Today, you're here to talk about all the new news. Do you think the existing customers have forgiven you for the app mass?
Do you think the brand has been restored? As we've been saying, I think that there's the quant and there's the qual. The quant is green across the board. Performance, reliability, customer care, interactions, social tone, NPS, these things are all restored to levels that we enjoyed before any of that happened.
On the qualitative, I love the fact that I can show up on Reddit or social media broadly and engage with our customers and have a constructive conversation about things that they're excited that we're doing and things where we're still disappointing an individual customer in some dimension. Maybe this game is like memory over. You're just always trying to polish off the remaining rough edges and everything that you do. I have a real critic's eye when I look at the work that we do and if I ever let that slip, I'll remind me of where the work remains.
Yes, I think in every measurable way, it's behind us, but it's a never-forget chapter for the company. If you win a $3,000 a month payday for life, what would you feel free to do? Maybe take a long weekend, every weekend, or try a bunch of new hobbies? What do you feel free to upgrade and listen, and add free?
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All that plus the strange tale of the Gorilla poop obsessed, father of cornflakes, in the latest episode of Gastropod. Find Gastropod and subscribe wherever you get your podcasts. I want to talk about all the news here. The news here is a bunch of big bets.
You've got Cenas 27. That is the new name of what you were calling an audio operating system. That has something called Cenas Fabric. Boy, I know you know me.
I'm like ready to go at all these names and all these ideas in there. Somewhere is MCP support. There's a big idea about assistance that I want to talk about. You're casting some chips, right?
You're saying, okay, here's a big new idea. Trust us. We're going to get it right this time. You're ready for it.
Yeah, I feel very ready. We've spent the last year building the new products that tell the story of this next chapter of the company. We're really excited. Not just about their capabilities, but how we're going to share them with the world and where we're going to enter a period of co-creation with our customers.
We've recently done that with some of the app enhancements that we've been rolling out. We've rolled out that through a mechanism that allows our customers to opt into them explicitly and talk to us about what they see in their own homes. And this has been such a delightful chapter of engagement with the community that I think really lacked for a while. So yeah, I feel very ready to talk about it.
Yeah, it's going to send us 27. So does Fabric. What are these things? Explain to people what's going on here.
100% hardware, 100% software. For 20 years, we've given all of our hardware objects names. Rome, Arc, Beam, Ace, Era. But we've never named the software platform.
The thing that takes these collection of products and creates a consistent pull. And so in some ways, the big news that we're sharing right now is that the software platform has a name called Sonos 27. It has a bunch of promises that it makes to customers and it's nuts and bolts. It's an ecosystem platform.
It allows a huge heterogeneous world of services to come together in your home. It's a system that has a deep technological layer that tunes the audio for every part of your household system called TruePlay. It's fundamentally built on a kind of fabric that brings all of the products together into a key piece of whole. And architecturally, it's one of the things that's really, really unique about what we're doing.
Our products in your home really find each other on the local network and create something that is truly where the whole is greater than the sum of the parts. It's what unlocks so much of the magical experiences that we've delivered through the years. We're about to announce some exciting new capabilities for Sonos Fabric and for pointing it back to the future of more to come. And then finally, we have these Control and Engagement services, App, Voice, Web, you mentioned MCP, which is a new dimension that we're adding.
We also have an entirely new voice-existent experience. And so we're doing all of that across the software ecosystem and we're even giving a little bit of a preview of capability that we're calling custom agents, which is like multi-tenancy inside of the platform to allow modern voices to live side-by-side and interact with one another on the platform. So doing all of that, Emk has a great hardware too. Brand new amazing soundbar and amazing set of new headphones.
The B-Multra is the new soundbar and I think it's 7.1.2. This is very nerdy, but to me it represents, oh, Atmos is like totally mainstream now at this price point. Yeah, totally. That might be an entirely different home theater podcast.
I can't wait to hear it, honestly. I mean, it really, I mean, obviously I'm biased. It's just but it sounds amazing for people who've heard it just can't stop talking about great distal soundbar sounds. Honestly, I should quit doing this and just do home theater podcast.
Like, where does my heart truly lie? It's just doing that. Anytime. Which is you, your co-host, we should do it.
Well, I just judged the TV shoot out and Sony lost. It's like a big deal. There's a lot going on that world. Tell me about the idea of naming the operating system, Sonos 27.
It's obviously middle of 26. It obviously tracks Apple's naming team. It's very much implied as there'll be a Sonos 28 one year from now in August 27. I think from the beginning, we knew that we wanted to give it a name and we knew that we wanted the name to be able to express this idea that Sonos does evolve over time.
And for many, many years, that evolution was to the great benefit of our customers. We had lossless audio for Apple. We had, you know, high fidelity audio for Spotify. We had AirPlay.
We had Alexa. We, through the years, we just over and over and over again expanded the capability of the products that were already in our customer sounds. We didn't have a way of talking about it at all. So we wanted to give it a name.
We wanted people to understand that improved time. And so as we started thinking about like, well, how do you really do that? The first thing that came to us was like, we already have OS, like right in the name of the company. And so to try to brand some entirely new things out like kind of like a cell phone.
And so we pretty quickly sort of reverted to this idea that like the product is 100% hard, right? 100% software. The product is Sonos, not Arc. Like maybe the OS to is called Sonos.
And then it's like, well, what companion moniker can we give it to drive that idea home? And obviously we talked about version numbers and a number of other things. But we did decide that we'd like to take advantage of this. Like once a year, we'll stand up in front of our audience and tell them about how the platform is evolving and using the year as a descriptor for that was a better mechanism than almost anything else we thought that was available to us.
Those software cycles, you know, yearly big releases, Apple is basically the only company that sticks to it. And even they don't do it. They announce all the features and then they slowly dribble them out over the course of the year is they come into focus. Again, this is a lot of questions about nature of software development in 2027.
But the idea that there's one monolithic release once a year, the interest is not away from that. Is that your idea? Are you going to do something different? Fortunately, the idea industry has gotten away from that.
And our intention is to have a moment where we can tell the story of the operating system right now for the next six or 10 months. And as you'll see, even in this moment, the things that we're announcing, many of them will be available and what we're calling early access, which is the chance for us to put them out into the product, sort of opt-in for our customers to do that sort of perspective, collecting real world data, collecting sort of work. And all of these products will continue to evolve through the year. I know that I'm going to get questions from customers and observers about, but what about this feature?
And I think really the answer is going to be like, we know this stuff. Like there's very little that you can say, hey, someone should do this. That's probably not on our list. And so to be able to say, look, part of what we're communicating with the 27 of it all, is that this stuff will come in 27.
And if it doesn't, I'm 28 or not. One of the big ideas here is obviously this is an operating system that addresses a bunch of hardware in your home. That thing mostly looks like speakers at some of this connected to your TVs. You've got command and control, you've got other assistants to talk about.
And that operating system should gain more capabilities over time. What does the far version of that look like? Is it there's just an ambient assist in your house that is addressing the fabric through MCP? Is it you'll interoperate with other speakers that might be in the house?
What is the biggest vision of this look like? Yeah, I mean, I think in some ways you'll have to stay tuned to see where we take this. But I do think I'll start with this. I think that every home deserves this infrastructure.
Like I think sound is it's incredible sort of mood stabilizer, if you like. I mean, take the audio track out of your favorite movie or television show and so much of the lights comes out of it. And I think having an out loud audio experience in your home is something that everybody should enjoy. And so part of the big picture is we want to spread this far and wide and make it accessible to everyone.
And you know, you sort of running joke about the first generation of assistants, they've ended up sort of being for timers. I think you really do when you're building out this next generation of voice-centric experiences. You do really have to look at like, not what can the technology do, but what does the customer want? And you know, one of the new capabilities in Sonos 27 is our new voice assistant.
And our voice assistant, yes, is built on modern generative technology. But it's really inspired by what people tell us that they like to see and know. And I'll tell you, the killer app of the assistant, they just want to be able to talk to it like an older person. Well, stop.
Like, like the first generation systems, you just had to guess what to say every time. And even then, maybe it took two or three attempts to get there. It's such a game changer to be able to say, I got out of my love in college. The one with the Cacot Twin Singer, I think the song ended up like as the theme song for that show was on Fox was called the curmudgeonly gothouse.
And just had the thing it's to drop a mess attack. I know, we took it off the streaming. It's a real, it's a real, it's a sad, it is, it is. So that's kind of job one, if you like.
And the first generation systems didn't do it at all. So it was always in the new OS is exceptional at this. That's the kind of neat, the customer where they are. What else did I say?
Well, they say a little bit about like what I would call mood and audience. So lighting, we'll bring lighting into the environment so that you can express the scene through both sound and and then they do say my wife and I are constantly settling a little bets in the kitchen. What was this thing called? Who is that actor?
They do want comprehensive well-knowledge. Wanting to answer the kids homework assignment or whatever. These agents do need to be able to hand off to comprehensive frontier models to get perspectives on the world. And in some instances, those perspectives are, allow them to use the frontier model to manipulate the audio environment to place the music that people are talking about on TikTok and pick some stuff that sounds like the Chew-Gaze music that I like to recognize in college.
Like we can leverage the Power of Frontier model to understand what's being talked about on TikTok to sort that against my use of preferences and deliver it. And then, I guess, while we're, while we're numerating what I think a modern voice assistant has to do, it has to be fast, it has to be reliable, and it has to be kind of responsible and affordable to run. I mean, I do think that customers want this as a fundamental capability of a product like Sonos and we built an architecture that allows us to deliver it to everyone, our customers and so on. There's a lot of big decoder, big verge ideas in all of their all the way down to where does the compute live, right?
Like where is the computer in your house supposed to be? You're describing a lot of command and control. There's integration with smart home stuff. I think it's a luchron partnership you have now.
There's an infinite number of smart lights, which is that might help you control your lighting. Your company is part of the matter standard, but you don't actually enable matter on Sonos speakers and I think are reporting from the wonderful Gen 2E or smart home reporter that suggested you don't think it's ready. This is a lot of stacked problems. And I'm just going to read your press release to you.
It says Sonos 27 MCP allows you to connect any outside AI system or agent to your system, including Chachavit. I'm a customer and I'll tell you the one that I want to use is Gem and I for home. Google's Assistant and has been broken on Sonos for ages because of an ongoing lawsuit. Is that fixed?
Is Google in your list? Because there's a lot of competitive dimension here. In many ways, we have a strong relationship with Google to this day despite the lawsuit. Virginia is one of the most intimidating services on the platform.
We do have a long history of a first generation Google Assistant on many of our products. We'd love to continue to work with them on all of these things and those conversations continue. I guess I'm just going to push on this. Connect any AI assistant or agent.
There's two big ones, right? There's Alexa and there's Google. You might be in third place. The series exists.
Those are the ones, right? Maybe there's going to be this Chachavit product in the future. One tees part two different things. Let's talk about command and control of the Sonos system through external agent interfaces.
Just use every buzzword. What I really mean is we think there's a lot of utility in showing up inside of Chachavit on the web, on your phone, on the desktop, in the same way that Platt for your calendar shows up in those environments. So with Sonos 27 MCP, we'll show up in the directory of Connectible Services in all of those environments in Gem and I, in Claud, in Chachvpt, in Brock. By connecting that tool into your experience, however you access it, you'll be able to summon Sonos.
Maybe you're working along on something. You want some music to play. Just tell Claud to make a player. Just tell Gemini to make a play from the desktop or mobile surface that you're sitting in front of.
That's a pretty powerful building block. As we see these open-claw style, pro-active, asynchronous agents evolve. Now they have access to Sonos in a supportive, affordable way. It's been a bunch of hack MCPs and CLIs around it.
Many of the reporting about are among the most utilized examples for these things. We're excited to officially support such a thing, as much as fun as it is to see the mainstream use cases. Very excited to see what hobbyists are going to do with Sonos MCP. So let's not talk about on-device though, on our devices.
We've been working closely with Amazon for some time to bring Alexa Plus to our platform that we're continues. I'm excited about it. I don't have anything to announce today, but we've had a long and no success relationship with Amazon for the years. Canvas was on the board with me for many of our at Sonos.
That's just a people on the Spanish imagine that you'd like to have a personality that lives inside of Sonos. That's the John Q-SAT character from High Fidelity. Kind of opinionated, record store geek who is interested in like subtly shading your perspectives in music and making recommendations. You can be able to go in, set up a custom agent in Sonos that says, let's use OpenAI inference, let's use this voice I pick, and let's give it this personality, and let's have it live alongside an agent that's powered by an anthropic inference that's going to be giving me advice on cooking.
Let's do another one that is only interested in connecting me with the opportunity to see live music. All of these tools will be able to show up inside of Sonos and vote by the name you give it, taste onos, connect me to the curator, and talk to only about that topic, have a point of view, and be able to access the Sonos context so that they can sort of hand off from one to the other. Let me bring some of these together. There's the idea that there's external command and control, I have an echo dot and I say turn on the Sonos and adjust that.
Then there's the assistant that lives on your device that is either the Sonos voice assistant or maybe you're going to keep working with Amazon and Alexa Plus being there, and then we're going to make new custom ones out of building blocks that are labeled in lots of different ways. When I ask, where is the computer? This is like, to me, the big question in where does all this ambient agent AI actually live, where does it have control, is it going to happen locally, are we sending everything to the cloud, somewhere in your home, if you're going to control lights and music and everything else, there needs to be some logic happening in your home. There's a lot of standards to do that, some of them are good, some of them are bad, some of them have names that connect directly to the word fabric, like thread, like thread.
There's a lot going on here in terms of just the names and themes of what could happen. Where do you see this view? Who is your competition here? Is it that Apple is going to launch a new home pod with an AI enabled Siri and they already have a home kit which is a pretty well built and pretty popular smart home platform?
Is it, well, open eyes are going to have a hardware device and maybe their first one's going to be at home and you need to stave that off and make sure people are talking directly to you and you have a customer relationship. That seems not only undeveloped but even the foundations of how you build the products like Matter and Smartness standards are they're messy, right? They're political in very specific ways. So how do you see the competition and victory there and success there and then how do you solve just the capability gap that every other company has run into?
I think that we as an industry, there are these kind of platform shifts that unlock opportunity for companies who get lucky on time. So for example, the original .com era was really powered by Oracle and Sun Solaris boxes and data centers that you owned and operated yourself. And then we went through a chapter where the infrastructure became Linux and open source for your data tier. And then of course, we've had this huge long run of cloud infrastructure.
And I think if your company that builds your stack on Solaris and Oracle, there's an opportunity for a company to come along and build the stack on Linux and Postgres in that moment and suddenly find efficiencies that are very, very hard for you to claim. I think something very similar is happening in voice assistants. You know, when I hear you on show, talk about your experience with voices assistants that are going through the transition of first generation to second generation, it feels to me like so much of the challenge there is about how do we drag along all of the committed relationships that we have for the internet connected toaster and back massager and all of the things that are connected into those existing historical ecosystems. And obviously, even in the world of AI, just how much has changed in the last couple of years underneath the companies as they're building up their answers here, it really feels to me like we are stepping into a moment where a Gentic tool used powered by protocols like MCP are going to kind of disintermediate a lot of that stuff that you're sort of talking about in the immediate term.
We're really excited about what we can do in the use cases that our customers are telling us they care about, getting mood and audio in the home with great solutions for that today. And I think we can take advantage of the shift to truly next generation architecture without the baggage of a decade of internet connected light switches from 17 different protocols with 17 different hubs in the closet. Well, I mean, part of the opportunity there is you don't have the big voices system. I don't think the current service voices system is not at the scale of Alexa or Google Assistant.
I'm just guessing they do have that problem. The light switches in my house are in the walls. They're going to be there. That Lutron hub is there.
It's not great. Although Lutron is the best one, but it's still the box in my house. And there's a lot of those little weird little boxes in my house because I have a smartphone. All of those dependencies exist for those platforms for reasons.
And if you show up and so use my voice assistant and said, and it can't operate all of the lights, well, I'm just going to fall back to Amazon or I'm going to fall back to Google and they know it and they know they can't break those things. And I've talked about it a lot, actually, in a context of Alexa Plus. The promise of AI, at least from my very abstract vantage point is, boy, I should not care about any of this. Right?
There's a network in my house. There's lots of devices on that network. They have some access points on that network. Maybe they're API driven access points.
Maybe they're MCP. It should not matter. There's just a bunch of devices on my network that you can control somehow. And this all seeing robot that is going to replace every job in America should be able to traverse my network and turn on the lights, like without any help.
Like, that's what it should do. And some of the very first big vibe coding shockwaves were AI researchers, like bleeding edge AI researchers being like, I figured out how to control my shades, walk through my network and the shades can go up and down. We're not there at the consumer level. Like the promise is not there.
I'm still here talking to you about Matter and Thread and HomeKit and whether or not Google Assistant can control my Sonosamp, which by the way, it can't. And that is my one ticket to you that I've done some in on threads. That's the promise. But the gap to that seems really, really huge.
Are you able to close it? Is that the opportunity? I think we're just still in the Apple two days of the home automation space. And so while there is, as you point out, this incredible wild, heterogeneous world of different light switch controllers, I think when you talk to mainstream consumers about their homes, they're not there yet.
And so I do think that because of the profound technological step function of agent control, these kinds of services and things like tool use that as the consumer catches up with the industry's ambition to solve these problems that new technological solutions will emerge. And I'm really excited about how we're positioned to ride that transition and not be encumbered by the decade early adopter, internet connected light switches. What do you think about the light switches? They're already in the walls.
I just don't think there's enough of them to matter in the final answer. And of course, we're trying to create a great purpose. We have them. We have all kinds of light switches.
We're mostly trying ones. But that's kind of my question is the first natural customer for something like what you're describing is somebody who is already using these products in some way. If you show up to my house and there's no matter support or whatever, I'm like, why can't use it. Is it though or is it more like the difference between the people that were adopting creative labs and the three players before the iPod came along?
Was the iPod before those people or was it for people that had that problem but were nowhere near the people that had been early adopters or the iPhone for people that were using Windows CE or was it for people that were using headphones that were running for the transition? Is that the idea here? Is that the iPhone for smart home control or iPhone for audio and home? That's right.
The turn there that I think is really interesting is who are you going to talk to? Where is the computer? What is the computer? And you're kind of describing if you want music, you're going to talk to Cenas.
But you also have a general purpose assistant like Cloud or Chashivite. They can talk to Cenas too. And it's unclear to me maybe one of the most fascinating questions in this moment in tech of where the interface goes. Where are we all going to have one chatbot that does everything and all the demand is aggregated there and opening it up.
It becomes more powerful than ever. Or are we going to have lots of assistance that we address in lots of different ways? And it seems like your bet is so no, we'll have a personality or multiple personalities in your own. And customers will address that.
And all the other stuff will go somewhere else. For 20 years, we found a lot of success around the idea of embracing sort of every dimension of the problem. Yes, there's an app that you're welcome to engage with us through AirPlay or Spotify Connect. Yes, we have a voice assistant that lives side by side with Alexa.
Yes, we have a proprietary mesh, but it integrates with Bluetooth and even line in. And I think our bet is that we're going to, we're about a size and scale that allows us to both be nimble and react to these changes, but also have enough horsepower to sort of keep up technologically with the best of the category we're doing. So I think some of this just plays out on the field. Just one last idea since you said a couple of times, where does the compute live?
I think one incredibly powerful opportunity for Sonos is that we do place compute in millions and millions of homes. People think of them as computers often, but they are. They create a seamless experience that is really the integration of a set of cloud services and local services in a way that looks like just one surface area to the customer. And I think that the answer to your question about does this live in the cloud?
Is this live in the home? Is it live in the box? I think the answer is yes. And I think we're pretty uniquely situated to take advantage of an architecture where it's not cloud only, it's not home only, but it's a sort of integrated system that combines all of that together.
And at the end of the day, that is what Sonos 27 is. Just to make that really reductive, when I say where is the computer in the home context, what I mean is maybe in the 90s, early 2000s, there was a vision that we would all have home servers in our basement. And they would do all the logic of our home. They would have all the storage and Microsoft would sell you Windows, Home Server in the basement and Windows Media Center in the living room.
And you and I probably both watch all of those Bill Gates key nuts at CS. And that really ever came to pass. Instead, we put a lot of cheap computers near all the TVs and they connected to cloud services and they're basically just running web browsers. As you well know, that is a very different version of what needed to happen and how the market played out.
In the smart home, I've got a bunch of automations in my house. I've got to open the lights, turn on and the other stuff happens. At night, the door's all locked, but not locked. That logic has to live somewhere.
And my perspective on it is it should live in my house. If the internet goes down, the lights should still turn on. This is not anything to do with big AI integrations or the new MCP way to address the center system. Those are big ideas.
And I'm just like, consistently dragging you back down into the dirt of life. If the internet goes out, are the lights still going to turn on? You don't want to be the partner that put in the internet connected light switches that don't work when the internet is down. But it's not just that internet connected light switches, it's the logic of making it all work together.
There. For 40 years now, we've been talking about technology for that home. And starting with the person computer, which is supposed to be the center of the technological household. But we didn't really get that.
We got laptops that people, you know, mostly use it work and use it at the home. And then we got mobile. Mobile is supposed to be the thing that you engage with when you leave your house on your way to work. And of course, the fundamental media of mobile is so addicting that it's all consuming.
When you sit at that work, we use it all the time. But my observation about our use of it in the home is like, nobody loves it. Nobody knows. I wish my husband was on his phone more.
I wish my kid used their iPad more. And so we're looking for ways to get beyond that. And to your point, the other computer that's in the home, like I said, the box is largely decided by browser to buy a bunch of services in the cloud. I think it's pretty interesting, actually, that in 17 million homes, so no says like an actual mesh of compute in your house with a real horsepower, real memory, real CPU, real capability, real operating system, just waiting to be the container for some of the kinds of things you're talking about.
So super interesting. We'll figure it out every time. I feel like you're this close to being like, and then the test list will be a data center. Like there's something there that is like maybe that the line actually wanted to push on a little bit.
The initial Sonos innovation a hundred years ago, when a company started was, oh, we can build a mesh network, right? We can do wireless audio at scale. We can synchronize the latency of all the speakers. It sounds like the same music playing at the same time.
There's a lot of big engineering back in the day. And now you're still still, I mean, can we still with a lot of our our software team does day in and day out is they extend and maintain that infrastructure. There's features you're announcing here is part of fabric that I think are interesting, right? If you have surrounds, you can just place them and they'll figure out that they're surrounds immediately starting the surround speakers and home theater.
There's just a lot of potential as you're describing in the notion that, oh, there's a big network of small computers in my house that can come together and do things you would not expect. Is your focus that they will always do audio things, or is it the focus that they will have many more capabilities? I think any thoughtful product leader is going to tell you the focus is an important part of success. And we are, I do feel like they've got so much interesting work for us to do and around creating a audio system that sets the mood for your home that I don't want us to take our eye off of that opportunity.
And we are doing some really exciting things in Sonos, fabric and in Sonos 27 that we should talk about, they get to some of the work that you're describing. But certainly in the moments where you allow yourself to think about what's the company in five years with the company in 10 years, you can't help it, but interrogate what the opportunity is for a mesh of fabric of compute that lives in home. I want to end by talking about headphones really quickly. We should have a CEO of Boson, she and I are pretty searching conversation about what happens to the headphone market in the time of AI wearables.
And my fear, my anxiety about audio always is that consumers will always pick convenience of equality. It's just the history of the thing. I've got a set of air pods on this desk and they don't sound great, but boy, are they convenient. And that's just my guess.
It's always been what the market is doing, convenience of equality. We're going to enter a time when Apple puts cameras on air pods and you can talk to them with Siri when Google and Samsung ship very similar products. There's undoubtedly going to be a flood of AI hardware startups that want to put something in your ears or any body in some way. You are in the headphone market, you're talking a lot about AI, you're talking a lot about fabric.
That seems like a cataclysm coming for headphones. The same way that the removal of the headphone jack was a cataclysm in the headphone market. This seems like the next one. How are you preparing for that?
Do you think there's going to be a range of voice assistants on headphones or do you think what you would call the first party vendors are going to just grab more and more that share? Before we jump to the hypotheticals about where headphones are going to tell you a little bit about the new headphones? Yeah, of course. All right.
You know, one of the things that you get from entering a new market is the opportunity to build something, put it on customer phones and learn a lot about what matters. That's better. So we launched Sonos Ace two years ago. I think measured against any of the other premium over-gear noise cancelling headphones in the market.
They're a great product. They've got great reviews, great noise cancelling. They're super comfortable. They look great, really proud of the product.
They weren't lawfully integrated into the Sonos ecosystem. I mean, at launch, you could swap to one of our sound bars, and all of our sound bars. I think it was the most visible expression of the missed opportunity of that moment. For the company to just always remember that the products that we make are part of the Sonos system, not individual offerings.
So we ended up with a great pair of headphones, but honestly, I mean, we do them all the time. There are lots of great headphones. When we set out to take all the lessons that we learned from Ace to design Ace Ultra, at the very top of that list is like, we have to do the hard thing. These headphones have to be able to show up in your home as a part of the system and the model through which you invoke your headphones has to be completely seamless and delightful.
And so we built an entirely new hardware platform for Ace Ultra called the phone engine two, and it unlocks this capability at the hardware level. And then in Sonos OS 27, we built virtualization so that any one of the speakers in your home can deliver the audio platform to that speaker, but can also act as a proxy for your headphones, which doesn't have the horsepower except to run the full stack, kill battery life, etc. And so now with Ace Ultra, you'll be able to link your headphones to your Sonos system, walk up to a speaker that's playing, press the button, your headphones and the music will jump from the speaker into your headphones, no Bluetooth, no phone, you've been walking around your whole house and enjoy the music, come to another speaker, press the button again, and it will jump to that speaker using some BLA location sensing stuff that we've developed. Super magical, it's the one job that we had and didn't deliver on with Ace, we're really excited to get it into the market.
And now we get to that on the on the theater side is, as you mentioned, we're making all of our portable speakers, Sonos Play, Sonos Move, capable of being rear channels for home theater. And that sounds really easy. I mean, people be like, why wasn't that always possible? But to your point about the deep technology of it, the way that we achieve high fidelity low latency surround experiences in the living room is by directly bonding our rear channel speakers and subwoofer to the sound bar on a proprietary network, not through your access point.
And so for a speaker to seamlessly hop between being part of your Sonos system as a music node and part of your Sonos system as a surround channel means that you have to do now a real time reconfiguration of that networking stack. And you have to know when to do it. So we're using accelerometers in the product to actually know that you've picked it up and set it down in a new location. And we're using Sonos positioning system, which is ultrasonic signaling to broadcast the room.
Hey, is there a sound bar here? Ultrasonic comes back saying, I'm here, they negotiate position left, right distance so that they can optimize the surround sound experience you pick it up again, you take it back to the kitchen, it's right, your speaker again. All happens magically, no use of the app. It's pretty cool.
That's my question. I have fun. So this is my big worry, right? You've got really cool headphones.
They have a feature that no one else can ship. And Apple's gonna say, look, our new app on the series and then and you can just say, show me what I'm looking at and a picture will be taken automatically and something will happen. Yeah, I mean, I'll get over the privacy implication of that. But like that's a collapse of the background.
Maybe it has come in all kinds of form factors today over your in ear cuffs wireless wired. It's a market where people choose different form factors for different jet tasks. We're really focused on this personal in the home listening, what do you do when the baby's asleep? What do you do when you want to move the party from the kitchen to the den while you relax for the evening?
And we think that there's a bunch of really interesting use cases there that other people aren't paying attention to. I think broadly over the course of the next couple of years, we're gonna get all kinds of adventurous whackadoodle consumer electronics that are connected to this new emerging AI universe. Most of them will be a swing in the mist course. We've already seen some of those just a little hard to speculate about I think about which of these things if any is going to have its kind of iPhone, it's iPhone, no matter what you think is going to happen.
I think we're gonna see a replay of what happened when the headphone jack had taken away. It was an open interconnect. There was a really vibrant market for all kinds of headphones and a bunch of those companies don't exist anymore. Right?
The sort of like high end wired headphones for phones anyway have mostly gone away and you have a bunch of sort of medium Bluetooth competitors, but that but the phone makers have largely taken that with first-party products and then you have your products behind competing with really high end noise canceling products from both and so on and so on and so on and so on and so on and so on. And that is like the airplane set and the lack of the open interconnect is really killed for the vibrancy of the low and middle end of the market. Okay, well there's one big thing they can do to make sure the high end belongs to them and it's integrate AI right in like very specific ways directly into the operating system. We'll see how that plays out right?
There's also a thing that's different this time is there's a vastly more energized European regulatory environment. Who knows? I can't tell you but like all that stuff is a swirl in your head phone maker and it seems like different head phone makers are taking different approaches to this. The only counter that I might offer is that there's a lot of talk about the well garden of the Bluetooth advantages of the platform companies have but I would say even without the European regulators it's sort of notable that something like the Metaglasses can a reasonable I think commercially viable set of experiences that are principally powered by compute that lives on your phone and still deliver conversational AI that you know is mediated by Bluetooth connection admittedly behind some of the obstacles that you're describing but the obstacles aren't so profound that clever companies aren't figuring out how to work within those wings and rings.
No I'm very curious to see how it plays out. It doesn't seem like it's in focus again probably because like you say none of the products are in focus. No one knows what hit product here looks like so you might as well let a thousand flowers bloom and then radically can be more akin to that. That seems like what everyone's doing but something there is going to be a turn that happens here.
Tom I've just done your time I think you can tell I could talk to you for ages and ages about all kinds of things. Super fun. Tell us what's next with Shunas when does all this stuff ship? I think by the time this airs we'll have announced all of this the world we're having a big event in New York to share Sonos 27 and Sonos 27 and the Ace Ultra and Beam Ultra can't wait to get this stuff out into the world and begin to hear what our customers do with all of these exciting new products.
Many of the software features are going to be available and early access which means our customers will opt into them be able to give us feedback and be able to observe the time to do the comes back in their home and make sure that we're delivering an experience that we want to be excited about the moment of co-creation that's around the corner for us and then as we talk about the top of the hour Sonos 27 is absolutely a nod to the fact that we intend to keep doing this until the sun burns out there'll be a Sunos 28 and 29 and 30 and beyond. That's right I gotta ask you at the end I have ceiling speakers on my kitchen they're connected to a snap there's a Google home hub right there and it's broken I can't ask it to play music in the kitchen. Why are you gonna fix that for me? I'm ending on tech support.
Alright I don't know the answer but I'd love to be here at out for you. I know I know the right folks at the call so let's get you connected. Yeah we're gonna have a go-around table. Yeah if you're if your listeners have similar kinds of problems we get great people to help them and I was like to hear from you.
I can find me on social pretty easily. Usually I invite inviting people back when I'm saying we fix it and then we're gonna talk about what it took to fix it. That's the plan right Tom this is great thank you so much man. Super fun thank you.
I'd like to thank Tom for taking time to join the coder and thank you for listening. I hope you enjoyed it. If you'd like to let us know what you thought about this episode or really anything else at all drop us a line. You can email us at coderattheberge.com or you can have directly on threads or blue sky.