Will Spotify build a smart speaker? The data is mixed.

9 months ago by Jeremy Bloom in News

You may have seen reports that Spotify is planning on getting into the hardware line, possibly with the goal of manufacturing their own smart speaker. After all, they compete with Apple and Amazon on the music streaming front; it only makes sense for them to offer their own music listening device as well.

First of all, this is all speculation based on a few job listings - the company is mum about their plans. But to be fair, at Thinknum Media we've run several articles that extrapolate business trends based on unexpected job posts (see: Apple engineer hiring jumped 80% this fall - what are they building?)

So, is Spotify doing this to convince investors for their forthcoming IPO that they're not just a one-stream pony? Or is this a real effort to compete with Amazon and Apple? One of the advantages we have is: Access to a deep dive of data, not just a single data point. And looking at Spotify's hiring record as a whole we've gotta say, this does not look like a serious effort. At least not yet.

The paper trail

Way back in April of last year, The website ZatzNotFunny spotted the tell-tale help-wanted ad on Spotify's company website. It sure looked like firm evidence of a desire to build some sort of hardware product:

Sr Product Manager-Hardware
We are looking for a passionate and seasoned Senior Product Manager that will join the Platform & Partner Experience team working to build frictionless and creative Spotify experiences via fully-connected hardware devices. You will be leading an initiative to deliver hardware directly from Spotify to existing and new customers; a category defining product akin to Pebble Watch, Amazon Echo, and Snap Spectacles. 

Remember Snap Spectacles? Of course you don't remember Snap Spectacles. They were a stunning $40 million dollar failure. Snap only managed to sell 150,000 of them (with millions more still sitting in warehouses, unsellable). But at the time, everyone speculated that Spotify was going to move into the wearable space, perhaps with a two-way wrist radio/ wireless streamer.

The speculation cropped up again over the past weeks, as a handful of new Spotify job listings hit. Coincidentally, Apple was launching their HomePod speaker. Coincidentally, Spotify was launching an IPO to raise $1 billion dollars.

The data

So, let's examine the notion: Spotify will build a hardware smart-speaker to compete with Apple and Amazon.

The words are there: 

Senior Project Manager Hardware Production

We are looking for a passionate Senior Project Manager that will contribute in the creation of innovative Spotify experiences via connected hardware. You will be responsible for the overall hardware project delivery and work with suppliers to deliver the optimal Spotify experience to millions of users. Above all, your work will impact the way the world experiences music.

And pretty much the same listing applies to Project Manager Hardware Production (including most of the same verbiage).

Spotify is also looking to hire:

  • Product Analyst – Hardware Products - but this one has a much more amorphous job description: "Work closely with cross-functional teams of user researchers, designers and engineers... You know how to understand and solve loosely defined problems and come up with relevant answers and actionable insights to guide product development decisions."
  • Senior Business Development Manager, Hardware - but this one looks like it's for integration with other companies' products: "We are looking for an excellent Business Development Manager that will focus specifically on developing and negotiating impactful strategic relationships with the key players in the Connected Devices space."

And that is all. Here's our data trail of Spotify's job listings for keyword Hardware:

As we reported earlier today, Apple is piling on the Engineers... 1,270 hardware engineers. Here's our picture of Apple's hiring.

Apple has 5000 job openings. In rather meager contrast, here's the picture from Spotify:

Okay, but how about overall job trends? Is there anything in the data that betrays a prospective Spotify Manhattan Project of hardware - of any kind?

Not really. 

Sales is peaking - hit a new high in mid-February, which is what you'd expect when a company is going all-out to bring their numbers up for an IPO:

Finance, likewise. Company is doing an IPO, you'd better be loading on the finance professionals:

Product Development peaked in September. It's currently up a tick, but nowhere near earlier highs:

Design and user experience also not much, and peaked much earlier:

Compared to their Hardware openings, there's a bigger bump in Office Management:

Even Data and Machine learning is down from last fall's highs

The motivation

Apple is notorious for building a beautiful, well-designed garden with high, high walls to keep out the competition. They kinda treat their users the way Krushchev treated East Berlin.

And Apple just came out with their HomePod smart speaker, which is not particularly friendly with Spotify. As  noted at The Verge:

"...the speaker requires you have an iOS device to use it, and it demands an Apple Music account to make use of Siri-powered voice control playback. It is antithetical to platform-agnostic Sonos and unabashedly so, as if Apple is daring its competitors to try and compete with its hardware prowess and platform lock-in."

To be fair, you've gotta figure that anybody laying out $300 for Apple's baby boombox is probably already an Apple fanatic, and so not really Spotify's target audience in the first place. As  continued, while he's tempted to go for the lustrous tones of the HomePOd, he's not going to abandon his 6 years' worth of Spotify playlists and user experience.

On the other hand, one of the business caveats dutifully noted by Spotify in its IPO paperwork was the prospect of being locked out by its rivals. Even if Spotify is allowed in to play, they'll be competing on their rivals' home court. From the F-1 prospectus:

""Many of our competitors enjoy competitive advantages such as greater name recognition, legacy operating histories, and larger marketing budgets, as well as greater financial, technical, human, and other resources... Apple, Amazon, and Google, have developed, and are continuing to develop, devices for which their music streaming service is preloaded, creating a visibility advantage."

As @chrisvelazco noted at engadget, taking on a massive hardware project could be "a risky distraction" for Spotify:

Hardware projects are notoriously hard, and ambitious attempts like Apple's HomePod are proof that even with loads of money and brainpower, first attempts at a new kind of product often feel unfinished. It could be years before the unprofitable Spotify starts to hit its stride in an industry it's unfamiliar with, and that's assuming the company has the guts to stick it out that long.

And writing at Hypebot, Bobby Owsinski sees an even bigger red flag for Spotify. They grew their services to #1 in the world on other people's platforms. How long will they be welcome there if they become direct competitors?

That all changes when Spotify becomes a gear manufacturer and that’s when we’ll start to see things get nasty, especially if the company’s market leadership begins to erode. You’ll start to see other hardware manufacturers make exclusive deals with other streaming networks, and you’ll see the big 3 (Apple, Amazon and Google) shut out Spotify from their own ecosystems. 

On the other hand, Forbes' Parmy Olson takes the opposite approach. With smart speakers growing rapidly, and pushing a huge increase in music listening, Spotify has to provide its own hardware or die. 

...half of all the music currently being streamed in the United States is being playing on the Amazon Echo or Google Home devices.... Meanwhile, if you like Spotify because of a well-designed user interface, that suddenly becomes less relevant on a smart speaker. When you talk to a computer rather than look at it, you are beholden a single purveyor of a single stream of information. You can’t quickly switch between apps and songs like you can on a screen.

“Spotify has always been looking to diversify from [music] rights,” says a separate, legal source close to the company, who added that the company has 70 to 80 lawyers advising on everything from digital content arrangements to dealing with Silicon Valley tech giants.

Maybe if they want to be taken seriously they should hire a lot more engineers, too.

Jeremy Bloom

When Jeremy Bloom isn't writing about energy, the environment, or the amazing strangeness of modern life, you can find him drinking really good single malt whisky...

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