Should Apple buy Sonos?

Should Apple buy Sonos?

Summary: Apple should ponder acquiring Sonos in a move to tackle the home audio network market, a small niche with big potential, according to an analyst.

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TOPICS: Apple, Hardware, Mobility
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Apple should ponder acquiring Sonos in a move to tackle the home audio networking market, a small niche with big potential, according to an analyst.

That's the takeaway from a research note penned by William Blair analyst Ralph Schackart. The report makes a lot of sense. The logic goes like this:

  • Apple should enter the home audio networking market to extend iTunes and provide subscription services;
  • Sonos would round out Apple's lineup;
  • There's a lot of headroom in the home audio networking market.

Schackart writes:

The home audio market is just 1.6% of the $170 billion-plus consumer electronics (CE) end-market. In our view, the market is underdeveloped and existing products are too focused on the audiophile and aficionado market to become mainstream. We believe Apple has the potential to transform this market the same way it transformed the portable mp3 player market, growing it from nascent niche to a new product category.

And to enter that category, Apple should scoop up Sonos.

If Apple enters the home audio networking market, we believe it may consider buying Sonos. In our view, Apple could quickly integrate Sonos and roll out Apple-branded HAN devices, reducing the time to market compared with building its own internal solution.

Sonos is privately held. The company's wireless networking gear distributes iTunes and other services like Pandora and Sirius XM throughout your home. If Apple bought Sonos, Schackart reckons that the market is worth an additional $2 a share in earnings to the company.

In addition, the move makes a lot of sense for Apple's digital living room plans. Apple has been trying to take over the living room via video, but audio is a more natural fit in many respects.

Schackart writes:

We believe Apple ultimately wants to secure a position in the digital living of the future. While Apple TV so far has had limited success, the HAN market is another opportunity for Apple to expand beyond its existing product lineup (Macs and portable devices) and secure a position in the digital living room, in our view. Moreover, this product requires multiple points of presence for Apple to further invade consumer homes.

Picture the iPod and iTunes riding shotgun with Sonos' gear:

Would an Apple purchase of Sonos make sense?

Topics: Apple, Hardware, Mobility

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8 comments
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  • No to Sonos

    Apple already has products for Audio streaming. Airport Express and
    Apple TV, they just don't market them primarily for music streaming.
    What technology would they gain from Sonos which they don't already
    have inhouse?
    Pat S
  • I hope not

    I want Steve Jobs controlling all my consumer electronics gear EVEN LESS than I want Bill Gates controlling all my computers!

    Sure, I'd like much more creativity and interconnectedness in the CE world, but not that the cost to be exacted by ol' Steve.
    bmgoodman
  • No!

    As a Sonos owner I want the company to remain independent. If Apple purchases Sonos, the product strategy will shift to support Apple's overall direction. I would rather Sonos remain solely focused on their own trajectory without distortions introduced by serving Apple strategic goals.
    mkrigsman@...
  • RE: Should Apple buy Sonos?

    ABSOLUTELY NOT!!!!!!!!!!!!!!
    sonos is just crap... would make me think twice about apple being a viable option for anything music... would potentially ruin their fan base for itunes...
    the whole subscription business model is bad and only takes advantage of the end user...
    see lifeware and savant... both could care less about your overall experience with YOUR purchased media... they are more worried about charging a yearly fee to use their products... shame shame shame shame shame shame... please just go away... lifeware and subscription home audio/video... totally screwing the customer... ask any veteran Custom Integrator... this would be bad news... APPLE please don't even go here............!!!!!!!!!!!!!!!!!!!!!!!
    deathtolifeware
    • What are you ranting on about man... get a clue!

      Sonos don't charge a yearly fee for anything. They don't tie you into anything. Ask anyone who has a clue.

      Sonos supplies music systems, period. They don't operate any kind of subscription service. They DO let you use a number of third-party subscription services, but they are independent of these and offer a selection UNLIKE iTunes, which is the biggest lock-in going!
      Majik394-23130239621537072486824705199732
  • RE: Should Apple buy Sonos?

    I'm willing to bet that the analysts pushing this idea have
    skin in the game, and would gain financially from it. It's
    sad to see that Larry Dignan is stupid enough to either be
    a shill or take the bait. It's like that scumwad Ken
    Rosenthal of Fox Sports acting as a shill for big baseball
    sports agents and general managers of teams. They spoon
    feed Rosenthal a story about some player they want to
    either get traded or acquire. In return for getting a scoop,
    Rosenthal will be a whore for any general manager or
    agent who will give him a rumor to spread.

    I am sick of "Apple should buy this" and "Apple should buy
    that" stories. They're garbage. Apple rarely buys
    companies, and if so, they acquisitions are relatively small,
    usually to possess a technology and patent portfolio that
    extends what they're already doing. If you look a the
    history of what Apple has done, unlike the news from Dell
    this morning (acquiring Perot Systems), Apple develops
    from within. Truth be told, the analysts simply want to
    separate Apple from its cash, and profit from it. Larry, next
    time, blow off calls like the one you got from these jerks. It
    makes you look like a fool. Or worse.
    Mr_Incredible
    • My My...

      You're pretty wound up about a report from an analyst that has no skin in the game---William Blair is a market maker though---floats an idea that may be a bit interesting and you go off. From the report disclosure statement:

      Ralph Schackart attests that 1) all of the views expressed in this research report accurately reflect his personal views about any and all of the securities and companies covered by this report, and 2) no part of his compensation was, is, or will be related, directly or indirectly, to the specific recommendations or views expressed by him in this report.

      For the record, William Blair has investment banking ties with 3% of its buy rated stocks (such as Apple). It's not like the story came from a Sonos VC...Also the report was well thought out.

      And meanwhile is it all that bad to wonder what Apple would do with its billions in the bank? Frankly, AAPL should just shell out a dividend and call it a day.
      Larry Dignan
  • RE: Should Apple buy Sonos?

    It may be good for investors if it's seen as a good thing to do in the short term (and results in a nice little jump in Apple's stock price and some profit taking), but I think longer term it's a bad deal for all concerned.

    Firstly, the value proposition that Sonos offer is largely in being independent. They have a reputation for offering high-quality, easy to use products without the lock-in or inflexibility that comes with Apple. Many of their customers got them because of the reasons you mention (access to Napster, Pandora, Last.FM, etc.). Apple could easily add these to iTunes. They don't need Sonos for this. The reality is they don't want to as they are competitive to iTunes.

    So if they bought Sonos, it wouldn't be for access to these services, it would be for their reputation.

    The problem is that reputation would probably start getting tarnished as soon as Apple start to integrate them (and started turning off access to all those nasty competitive third-party music services).

    The very reasons you give for Apple to buy Sonos are the very reasons they probably wouldn't want them.
    Majik394-23130239621537072486824705199732