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Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

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October 28, 2008 3:00 AM

Sonos coming to Apple's iPhone, Touch: CEO Q&A

Posted by Brier Dudley

Sonos, a company whose wireless digital music system is the gold standard, is upgrading its software today and piggybacking on the iPhone and iPod Touch. Here's a screenshot of the free application, which turns Apple's Wi-Fi devices into Sonos controllers.

NowPlaying_IggyHiRes.jpg

Lots of exciting applications are coming to the iPhone and other mobile devices, but the Sonos application is particularly interesting because it has a consumer electronics company really co-opting the quality of Apple's hardware to extend their own product line. Rather than making accessories for Apple's hardware, Sonos is using Apple's products as an accessory to its hardware.

While Chief Executive John MacFarlane was demonstrating the new system a few weeks ago, we talked about Sonos' plans for Google phones, selling high-end gadgets in a downturn, user interfaces and using Apple's platform.

The free software upgrade Sonos is issuing adds new radio services, including connections to 15,000 terrestrial radio stations, but the Apple controller is the attention getter.

Sonos makes a great system for wireless playing music throughout the house, but it's expensive, with standard two-room bundles starting at $1,000. It consists of receiver units that sit in each room and an iPod-like controller, which by itself costs $399.

Apple's iPod Touch starts at $209, and some may prefer its touch controls over the hard buttons and click wheel on the standard Sonos controller.

In other words, if you buy a Sonos system you can opt for an iPod Touch as the remote and lower the entry price by nearly $200. It uses the devices' Wi-Fi radio and home networks to reach the Sonos receivers on the network.

After a short demonstration, my impression is that it's a great new option for people still wondering how to stream digital music around their house and have a top-grade remote that displays album art in their hand.

Apple's also gotten into the game itself with the free "Remote" application that turns an iPhone or Touch into a Wi-Fi remote control for iTunes, but MacFarlane said it's not really competing with Sonos' multi-room audio systems.

Sonos is also feeling pressure from Logitech's Squeezebox line, including its relatively new $399 Duet system that's marketed as an economical alternative to the Sonos.

Here are excerpts from my Q&A with MacFarlane:

Q: Are you concerned about this cannibalizing sales of the Sonos controller -- an iPod Touch is $200 and your controller is $400?

A: No. We're into filling the house with music, that's the goal. We believe there will be lots of ways to control that. We've always made the desktop [PC] controller free. The Sonos controller is a wonderful device. People will keep using it and we'll keep updating it. We'll rev it.

I think there's going to be lots of ways to do this. If Google does a good job with their G1, that will be a great platform. Some of the mobile Internet devices from Intel will happen.

The really interesting piece of the iPhone and the iPod touch is it really did hit that magical bar with a platform -- so we can deliver a great experience on here. That's really the bar, more than whether we hurt our controller sales.

Q: Do you feel that you've saturated the market at your previous, $1,000 price point for a Sonos system and this will open it up to people in the $500 range?

A: I don't think we're anywhere near saturation at $999, but if it opens it up more, that would be great. Especially in times like these, right?

Q: Did you see overlap between iPhone and iPod Touch users and your customers?

A: Definitely.

Q: So you're lowering the barrier to entry with the Apple platform ...

A: You've got to keep working at that, and this is a great way to do it.

Right now they'll be doing nothing but coming down in price. and as you have competition with Google and other MIDs, I really think this and its kind are going to finally deliver on the universal remote, It's the holy grail that everybody has always wanted.

Q: How worried were you about Apple's Remote application taking people away from Sonos?

A: They went after a different thing. They went after the college dorm room person that has powered speakers on their computer and, you know, people who want to get away from [the computer] and choose what you're doing. They nailed that.

In our space, getting music around your house, that's a pretty complicated device to set up [using Apple's Remote application]. You've got to keep a computer running all the time with iTunes on it, that nobody else logs in to. One person can choose what you're doing; you can't do multiple screens. If you've got iTunes running, you've got to tell the remote which one. That's a lot for a user.

Our users are music lovers, not technophiles. We want you to be able to come home, have missed your Terry Gross and be able to dial up and listen within 15 seconds. You can't even play an Internet radio station on an Apple Remote. You can't do any of these subscription services.

Q: I like Apple Remote but one thing that bothers me is that it hung a few times on my WiFi network. It was not as smooth as the Sonos mesh network. Will your Apple application have the same limitations or will it connect directly to the Sonos mesh?

A: It's going to have the same things. We don't have any ability to get to how the Wi-Fi [in the iPod] works because that's not exposed in the application kit from Apple right now so we have to use the Wi-Fi network.

We'd love to be on the mesh because that’s the best solution but we're going to have to wait until Apple lets us get there.

Q: Will you now add touch capabilities to the Sonos controller?

A: We've been struggling with that for the last two years. It turns out if you hand someone that has never used a touch device both devices [with touch and without], they'll use the normal Sonos controller. It's a little easier to get yourself started. If you're familiar with touch, you'll grab the iPod Touch. Unfortunately it's a crossing the Rubicon right now. That's too big of a jump to push our whole user base through, so we're going to have to straddle that for awhile.

We actually made a controller that had both a touch screen and a scroll pad to see if we could bridge that but you get a really nasty user experience problem: Do you make everything do-able from the touchscreen and from the scroll wheel and buttons, or do you make some that and some the other? Users got confused with those two, so the [Apple] path we've taken was perfect timing. We needed two [different devices]. I think that will go away. It's like 1984 when people learned how to use the mice. You hand someone the touchscreen, it's a scary thing right off the bat and then as you get comfortable with it it's a wonderful thing.

We had a really nice controller that used both but we decided not to take it to market because it just wasn't usable enough.

Q: Are you going to lower the price of the Sonos controller now?

A: I don't think so.

I've learned, in this kind of market change, you place all your bets and let the user choose. We put a lot of work in that app so it would be the best app it possibly could.

Q: How concerned are you about consumer spending?

A: It's slowed down for us but we're still growing. But Q4 is a big quarter for us -- who knows? If I had a perfect crystal ball I wouldn't be sitting here.

Q: Is your company likely to be acquired sometime soon?

A: We've had interest from time to time but I think everybody's looking inside now.

Q: How concerned are you about Apple expanding its connected home entertainment offerings?

A: I would assume they will. They tend to view the world around the iPod and docks. We have a lot of Apple employees who are customers. We should fit well.

Apple needs billion-dollar-sized markets. We're not a multi-billion market entrance. I don't think Apple jumping in is going to change that overnight.

Q: How is the debut of Logitech’s Duet media streaming system affecting your sales?

A: I think positively because it's helping create the category.

Q: Did its debut contribute to your decision to lower the Sonos entry point, with the iPod controller?

A: No. They have a nice product. Their product is harder to set up, harder to use, you have to have a little more technical knowledge. I think it's a good price point but I don't think it's our quality level.

Q: Are you going to use Rhapsody's new free track plays and click-to-buy capabilities?

A: We haven't bit that off yet but we're looking heavily at it. Rhapsody's a significantly used service for our U.S. customers.

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