Guess Who’s The Leading Headphone Brand?

Headphones have been centre stage of the digital music market since the launch of the iPod in 2001. Portable music started more than two decades earlier with Sony’s Walkman, but it was digital’s ability to fill a device with catalogues of music, rather than just one album that empowered music listeners to cut the cord from their home stereos. The mass market home audio sector lurched into a resultant decline that it has only just started to pull itself out of thanks to connected speakers.

Without headphones, streaming music would not have the biggest driver of subscriber adoption: smartphone listening. Back in the peak of the Walkman era of portable audio, headphone listening was still a comparatively niche activity and skewed heavily towards younger consumers. Now though, only 30% of consumers do not have a pair of headphones, and smartphone listening is the second most widespread way of listening to music – behind the car and ahead of home speakers.

Smart speakers and interactive dashboards are both competing for consumer ear time, but will never claim back the same share of listening from headphones that speaker-based listening enjoyed in the 80s and 90s. We live much more itinerant and connected lives now, with the smartphone our eternal companion. Headphones represent a marketplace with an unprecedented scale and ubiquity.

MIDiA has just published a new report exploring this marketplace and one of the key findings may surprise you: Apple is the market leader in headphone ownership.

Just as Apple stole Sony’s leading position in portable audio players, it is now doing the same with headphones. When its three headphone brand categories are combined (EarPods, AirPods, Beats – an Apple company) Apple has the leading market share in headphone ownership with 24%. Sony is second with 22%, followed by fellow traditional CE stalwarts Panasonic and Bose. The top four corporate-level headphone brands represent 61% of the total, illustrating just how fragmented the rest of the market is, with countless brands competing for share. Interestingly, Apple is the only top 20 headphone brand whose owners are not majority male.

For this and much more detail, including ownership by streaming service user, demographics etc, MIDiA clients can check out the full report here. If you are not a MIDiA client but would like to learn more about this report and MIDiA’s Business Intelligence Platform, email stephen@midiaresearch.com.

Sonos @ 15

Sonos, granddaddy of the connected home audio marketplace, is now 15 years old. Sonos was a pioneer that was so far ahead of its time, it inadvertently found itself as one of the key early drivers of streaming subscriptions. Visionary founders John MacFarlane and Tom Cullen had some long-term inkling that streaming would eventually be a major force for them, but their near-term vision was built on getting music downloads piped around the home. Now, 15 years on, Sonos has effectively achieved two missions: deploying iTunes around the home, as well as Spotify and co around the home. But now, the outlook is less clear. Sonos’s marketplace is complex and competitive more than ever. Furthermore, the departure of MacFarlane, a round of lay-offs and having ‘missed voice’, may have left Sonos looking less vibrant than it once did. So, where next for Sonos?

These are some of the key challenges Sonos faces:

• Battle of the apps: Sonos hardware reflects the company’s obsession with elegance and attention to detail. But, as with so many hardware companies (in fact the majority of them), Sonos’s weak point is software. Apple makes seamless software-hardware integration look deceptively easy – it is, in fact, nigh on impossible to do well. The Sonos app works well enough, certainly much better than it used to, and the networking of devices is usually relatively pain free. But in the app economy, consumers expect apps to work perfectly, not ‘well enough’. They expect high-quality user experiences, not functional experiences with lots of clicks and swipes, which is what Sonos can feel like when doing activities like building playlists. In spite of this, the biggest software threat for Sonos is the very fact that it is a standalone app. A Spotify user does not want to have one app to use on the train, or in the car, and a different one to use in the home. This is what Sonos effectively does right now. Sonos’s new CEO, Patrick Spence, knows this needs fixing but the question is whether Sonos can make the fix before Spotify and co come up with their own fix.
• Just play: Traditional home audio just works. You press play and there’s music. Sonos stood out way ahead of the pack – an admittedly poor quality pack – for out-of-the-box simplicity, though even now it remains a marker of good practice. However, the convenience benchmark for connected home audio still falls far short of traditional home audio. Sonos works most of the time, emphasis on most of the time. Every so often there’s a network problem; sometimes this is due to a firmware issue, other times it is the network itself. The network glitches of course aren’t Sonos’s fault but that doesn’t matter to the user experience. A CD player works every time, Wi-Fi or not. That is the convenience benchmark Sonos and all other connected audio players must meet. But even without Wi-Fi issues, pressing play is not always so straight forward because Sonos’s app experience is not on a par with its hardware experience.
• Sonos…sonos….sonos…: Ok, that was meant to be an Echo. Yes, Amazon’s Alexa vehicle has totally shaken up the connected home audio space. And with Amazon Music integration, it sets a standard for what an integrated hardware-software service experience should be. One voice command pulls up a song in an instant, no having to select which music source to choose. Yet Echo is far from the end game. In fact, voice is not an ideal interface for music. It’s fine for when you know exactly what you want to play, it’s also pretty good for when you want to select a lean back experience e.g. ‘play me music to work out’ – but it struggles with the more nuanced use cases that lie in between. Voice is another thing that Spence knows needs fixing.
• Good enough: And of course, the Echo is not a super high-quality audio experience. It’s a decent audio experience. Sonos might grumble at otherwise sophisticated users tolerating modest audio playback, but ever since the advent of MP3s and iPod earbuds, convenience trumps quality for most when it comes to music. Even Sonos is guilty of playing the convenience game. Though its speaker quality has improved, Sonos speakers are still a long way off the audio specs audiophiles seek. And yet, even this isn’t the biggest challenge for Sonos. The core problem Sonos faces is that the likes of Amazon, Google and even Apple are not focused on winning the home audio race, instead they view smart speakers as a beachhead for controlling the smart home. That is the war, home audio is the first battle. Just as Apple used the iPod as the first step towards winning the personal digital life war, smart speakers are being used in the same way in the home.

Under attack from all sides

There are countless other challenges too. Sonos’s mission of filling rooms with audio might not actually be what most people want. A smart speaker in the kitchen and a sound bar under the TV might be enough for most, and those may be best served via a native hardware / software / content ecosystem like Amazon’s Prime. At the bottom end of the market, cheap Bluetooth speakers are flooding the market, while for those consumers who do value audio quality over convenience, incumbent audio companies like Bose, Panasonic and Sony are all upping their games. (In virtually all markets MIDiA tracks, Bose wireless speakers are more widely adopted than Sonos.)

Foundations for success

Sonos is also upping its game and tweaking its strategy. The recently launched PlayBase shows both high-quality product design and a recognition that TV is the next big battle Sonos needs to fight, having already made good ground with its PlayBar. Sonos needs all the strategic nous and product excellence it can get. It has the low-end and high-end squeezing it in a pincer movement, while the big tech companies carpet bomb its heartland simply to gain a foothold in the smart home. Five years ago, Sonos was the golden child of its market. Now it is a company with a very strong brand in need of some laser focussed positioning in a remarkably competitive field. Sonos has enviable foundations, it now needs to build a new house.