Bose CEO Lila Snyder on the fight for high-quality audio

22:34Nilay Patel:You can sell expensive cables at 100 times the price of the regular cables, even if they don't do anything different. This is a lot of new customers for Bose. Do you think the B2B business is going to distract your core technology roadmap? How are you holding that all together? It is more complexity for sure. It is a broader mission. And I think we're ready for it. So when I was here last time, we were in the middle of the transformation that I would say was solidifying the foundation of Bose. And now we're building on top of that. So we've built an amazing marketing and brand infrastructure that we're now using to power three brands instead of one.

23:12But a lot of that capability can be put in the direction of all three. So the key is real clarity about who the customer is, which we've done a lot of work on the Bose brand for sure. And we talk about the music lover for Bose, but we've done the same work for Macintosh and the same work for Sonos Faber so that we are a thousand percent clear who the customer is and how we want to talk to that customer. So on the kind of products side of our company, I think really clear about what the mission is for each one of those brands. On the technology side, interestingly, as we become more of a B2B technology company, it's actually creating advantages back to the Bose brand and our luxury business as well.

24:00And what I mean by that is it's caused us to completely rethink the way that we do research and we develop our tech. So when in the past, if you think about Bose developing products, we were developing purpose-built technology for a pair of headphones or a car audio system. And I think last time we talked about the tech franchises, we care a lot about noise cancellation. We care about immersive lifelike audio, and we care about this idea of hearing what you want. And those are all experiences that are built on some basic building blocks of technology that we've been developing for a long time.

24:37But because we were developing them for our own products, we've had to do a bit of a complete shift in the way that we think about it so that we're now developing kind of ground up those building blocks. And now we're able to say, with common platforms, with common algorithms, AI, think of them as sort of AI units, we can create different experiences for our own products, and we can port that same technology through the same platform tech into other people's products. What that's creating is a lot of efficiency at the research and development level. It's creating more breadth, because now that we're thinking about things like noise cancellation for different spaces or spatial audio or hearing what you want, it actually is creating more innovation and more invention at the core.

25:29And it's making us faster. Because we've made these building blocks a lot more consumable for our B2B customers, guess what? It makes us faster at bringing our own products to market too.

25:39Nilay Patel:I think this is a great place to ask the decoder questions because you're describing the end point of a pretty big culture and structure shift at Bose that you've been architecting for several years. So how is Bose structured today? So, you know, there's a business unit structure, there's a functional structure, and we're, we are living in what I would describe as hybrid. So for the core functions that matter deeply to what we deliver, like engineering, like marketing, like supply chain, those are global functions that support all of our businesses. But because we've added new customer sets and really two new businesses with luxury and audio tech, we're also running four business units.

26:21So those four business units have business unit presidents, and they draw on the global functions for the work that they need.

26:29Nilay Patel:How many people is Bose today? About 2 ,500. And you're mostly in Framingham, or are you all over the place? We're global, all over them, yeah. And then how's that split between the, you said you're a hybrid. How's that split between engineering, sales, all that sort of thing? I don't actually think about it that way. But the one thing that I do know is that I, it's sort of the most important statistic to me is half of our employees are engineers. You're describing AWS. You're describing Amazon, right? You've modularized a bunch of components inside the company. Now you can build new products faster.

26:59Nilay Patel:This is really great. Every company that goes through this transition ends up hiring more and more engineers over time because you just need to build more and more components. Has that been growing? Are you investing more in that kind of engineering? We are for sure. So I think probably not unique to us. You know, we've been in this transition of hardware long, long ago, just hardware, and then hardware and software, and then more and more software. And now as we're building the technology pieces, those are truly just software products that are an algorithm kind of AI-based products that we're selling in.

27:36And so you see that mixed shift continuing. We're certainly seeing growth in our engineering ranks. And we've got a lot more productivity out of engineering as we start to have more sophisticated tools as we use AI and other things to help with some of that development. So yes, growing. And I think more productivity per engineer, if you will, as we start to use more sophisticated tools to do the development. it.

28:02Nilay Patel:You said it's pure software products, right? When you sell out to B2B, you're just selling the algorithms. Do those feel protectable? This is one of the things that I think about all the time. Like, what is the actual thing you're selling? And how easily can it be copied by a Chinese firm that does not respect our intellectual property laws or something like that? Yeah, I'm probably oversimplifying. We're really selling three things. We're definitely selling software, algorithms, etc. I'll come back to your how do you protect it question. One of the very special things about Bose is actually systems engineering, which is an underappreciated discipline in my view.

28:38So software is great, but software has to run on hardware in our world. Ultimately, that software has to get delivered through something. And the magic at Bose, I think, the secret sauce has always been systems engineering and how you're marrying together hardware elements, software elements for an experience that feels unified across the device and that's optimized to provide the best experiences. So we're certainly doing that on our own products, but you see that kind of a service as we start to sell more and more technology into our B2B customers. There's also a lot of desire for help on that system side because our expertise there is real.

29:19That's always been true in automotive, in our automotive business, And it is increasingly true in our partnerships and our customers on the audio tech side as well. So I think that's a second piece, which is really important to call out, is that it's not just software for software's sake. It's software that has to be integrated into a system where everything comes together to work. And then you've got kind of the idea of systems engineering and then services on top of that. So how you tune a product. Some of our partners and customers need help with that, want help with that. Some don't. So there are a lot of services that get married along.

29:54Sometimes it's the systems engineering. Sometimes it's things like tuning, et cetera. So three pieces.

30:01Nilay Patel:Can I play devil's advocate here for one second? What you're describing here, if you wanted to poke at it as hard as you could, is a process of a little bit of commodification, right? There's a lot of common components here. And then it's the layers on top that differentiate in the market. And if you're an audio nerd, you know, the magazines are all like one engineer in their garage innovated on speaker technology. And they made the speaker cones out of waffle paper. And now they're more transparent than ever. Whatever that myth was that sold a lot of speakers back in the day. If you're not starting from the products back, but you're starting from the components up, there's a risk that everything kind of becomes the same.

30:43Nilay Patel:and it's branding and marketing and maybe the sound signature that's tuned into it is artificial now. It's not from the components themselves. How do you balance that? Or is that just not a worry with modern consumers? I think what you're describing is if we're putting Bose technology in other headphones, doesn't that just revert to the mean? I think there's a second, the bigger market for us is not audio products, things that we call audio second. So for example, the XR glasses, the main function is not audio, but audio is really important. The car, you don't usually buy a car because it has a Bose sound system, but when you buy the car, the sound system is actually one of the most important features of the car.

31:25A projector that you buy for your house, you're buying because it's a great projector. We're partnering with Epson, but the sound is also really important there. So it's a little bit different, I think, when you get into audio second. In the audio market, I think the key is there are so many different customers who want different things. And so when you think about products that have ingredient technology that's the same, it's really enabling you to do things for your customer and the experience that you're trying to create. So I'll just use Skullcandy as an example. Skullcandy just launched a pair of headphones with Sound by Bose, and you couldn't have two more diverse customer sets, right, between who they're targeting and who we're targeting.

32:09We helped them with the technology, right? So there's Bose technology inside to help make that sound better. But the design choices of what they want for their customer are incredibly different than what you would find. And so I don't think you would ever put those two products, a Bose headphone and a Skullcandy headphone side by side and say, wow, this is really commoditized. It sounds the same. It is the same. They're very, very, very different. Yeah.

32:33Nilay Patel:I think I'm asking maybe slightly more about the audio second product, but if all of your audio first products come from the same technology base, the same modular components that can be remixed into all the products you want, do you lose the ability to innovate at the product level, right? If everything is made out of the same Legos, at some point you can't be like, actually what I need is all new Legos. I think the answer is no, because the product is so much bigger than just those ingredients, right so you know if you think about a headphone uh design comfort uh the all of the other features right so there may be a lot of ingredient technology but the ones that you choose may be different one of the things that i think you know we talk a lot about now is uh is being at the at the intelligent edge everything bose does is is what you know we would describe as at the intelligent edge and as you know it's a pretty hostile environment you have limited compute you have limited power, you're always making trade-offs between what am I putting in this product and how does that impact my ability to do that?

33:38Because there's just not enough room to put everything in it. And so I think the reason why you still see so much differentiation among products, even if some of the ingredients are the same, is because all of those product choices that you're making are really critical and you have to make a lot of them to fit inside that constrained environment that you're working with.

34:00Nilay Patel:This brings me to the other Dakota question about decisions. You've obviously made a lot of them. And you've got a few big ones to make that I want to come to around AI. How do you make decisions? What's your framework? I am a believer that you get the right people in the room. You have a intense debate that isn't always comfortable, that sometimes makes people a little bit queasy. And you move as fast as you can to decide, knowing that if it's wrong, you can pivot. We get a lot of type one and type two decisions move fast. And we had an ex-Amazon employee write to us and say, every decision is reversible if you have enough money.

34:39Nilay Patel:That might be true for Amazon. That's a very Amazon perspective. The reason I bring this up in the context of AI, I'm looking at the sweep of things you're doing. And I'm looking at where, in particular, the big tech companies think their headphones are going to go. And I was reviewing our conversation from four years ago. Boy, did we talk about Bluetooth a lot? We did. This is a core limiting technology. It's an enabling technology in an important way, but they hold on to what Bluetooth can and can't do on their platforms very tightly. And then their products, their first party products get to extend that standard in different ways.

35:16Nilay Patel:And they all do it. And this means broadly, if you have an iPhone, the best working headphones that will do all the things the platform wants you to do are probably AirPods. If you have a Pixel, it's probably Pixel Buds. If you have a Samsung phone, it's probably their Buds. And this is because they have reduced the capability of the interconnect. And one of the reasons they're doing that is because they want your buds in your ears 24-7 so you can talk to their AI systems on the back end. And this is their future. And maybe the answer is we're all going to wear metaglasses or we're all going to wear X-real glasses.

35:49It seems up for grabs in big, particular ways.

35:55Nilay Patel:What's your view of that? What's your view of AI wearables? And do you think there's room for third-party players here? We absolutely think wearables are critical to the AI future, right? I think that we're clear. The form factor, if you work backwards from that, we're going to use our wearable devices to communicate with our AI agents, and that is going to become more and more important and more and more natural. We believe that strongly. The second thing we believe is that is more likely to be conversational and sound-based than anything else, at least that we think is probably the primary mode.

36:29And so the types of technologies we're focused on around voice pickup, around clarity, around speech enablement are all, we think, incredibly important. What form factor you want to use as your wearable, I think the jury is still out. And I think the answer is going to be a whole proliferation of them. Some people will like glasses because they like the glasses. Some people will like open earbuds, which we hadn't launched when you and I talked last time. We talked a lot about open ear audio, but not yet about that form factor, that clip-on form factor that Bose invented and launched into the world.

37:06We think that is a really powerful form factor that will be for some. Others might want a watch or a pin or a ring or 18 variations of how those work together. Part of the reason we think being in the audio tech business is important is because it gives us the ability to participate in a lot of those different places that we might not naturally be able to go on our own. So we think form factor is going to matter, but I don't think there's a single winner there. At least that's my current view. I think that there will be multiple types of devices that consumers will choose based on their own personal preferences.

37:44And then, you know, we know there are going to be a limited number of LLMs, right? We know that those are going to converge to the large ecosystems that already exist. New ones may emerge, right, as we're seeing, but there won't be hundreds of those. There will be few of those. And yes, there may be some advantages if you stay within that ecosystem for your earbuds. But fundamentally, I think, you know, even though a lot of people do choose earbuds and headphones and other devices in their ecosystem, a lot of people don't. People, I think consumers still want choice. And I think it is important for those ecosystems and in our conversations with them, they need third-party players to interface with their AI as well.

38:26They need third-party players to produce devices that work with what they're doing because they recognize they're not going to have a full share of the market. and that choice matters. And so we believe we've got a couple of ways to compete now. Our own devices for sure need to be compatible across the different LLMs and the ability to interface with them. And we need our technology starting to crop up in other places where that interface will happen.

38:56Nilay Patel:Is this a way to just hedge the bet that no one actually knows what's gonna happen with AI? Right, if you're selling Bose beamforming technology to a handful of Silicon Valley startups making pendants, that means you're not making the big bet on pendants being a form factor yourself, right? You can wait and see. Is this just a way to make sure the technology is available and being monetized while you wait for the answers to emerge? There's certainly a diversification play, absolutely. And I wouldn't shy away from betting on a few. And if one becomes a winner, awesome. I also think that it's important that you don't lose sight of what your brand is.

39:33And the Bose brand, we are for music lovers. And if we start to branch out and create some of those other devices that are not core to who we are, I just don't think it works. And so it is a way to participate because we don't think those are areas that it makes sense for the Bose brand to go.

39:54Nilay Patel:We have to take another quick break here. We'll be back in just a minute.

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42:30Nilay Patel:Welcome back. I'm talking with Bose CEO Lila Snyder about getting consumers to care about sound quality in a world of literal constant noise. One of the things I worry about, again, as a music fan, as an audio nerd, is every single time the tech companies come to music, convenience wins and quality suffers, right? It's just, this is the pattern that has been repeating since mp3s first came out right we're gonna we're gonna we're gonna go from cd quality audio which in 2026 is still what people refer to as the best yeah so you can get cd quality is that's the bar but we went from that to i don't know 128 kilobit mp3s on ipods we stayed there for a long time we got a little better the headphones got worse the interconnect went from a wired to a compressed bluetooth interconnect like at every point the market picks convenience and there's some point here even in luxury where you just walk in and the music is playing because the ai has determined the music should be playing and the end point of the music is the least important thing it's just that it's happening to you and there's not this focus on like listening intently because you're probably also watching tiktok at the same time or maybe you're only listening to music on tiktok and that's where all your discovery happens and all of your music money spent at concerts and live experiences.

43:52Nilay Patel:Somewhere in there is the audio industry, right? It's been going through this convulsion. There's another turn coming here where Apple and OpenAI and Samsung and whoever else are going to launch AI-first devices that are conversational, that have audio input and output capabilities. And they will say, and you can also listen to music, and they will commodify it even further. And the idea of a music lover gets even more squeezed. How do you view that? Because as a music lover myself, I'm like, this is only getting worse. It's only becoming, it's not audio second, it's like audio 15th. Okay, so it's a complicated web there that you just spun.

44:33Nilay Patel:I'm having an existential crisis here. I'm gonna try to help you. In some ways, what we find with our luxury customers is what they're looking for is moments of clarity, quiet moments where you put down the phone, you put on a record, right? You listen to it the way that it was supposed to be heard on an amazing sound system. And the quiet nature of that, the ability to step away from what is a chaotic digital world, that trend is picking up. It's picking up. We see it in the luxury space. We actually see more of it in the premium space a little bit now too. And so I do think that the appreciation of music, just appreciating it for the emotional state that it puts you in and what it does for your mental health, I actually think that is a trend we're seeing.

45:24And I actually think that's gonna continue to grow. Our belief and part of the reason that we started this audio tech business is we want you to have the best sound experience no matter what, Even if you're listening in a hostile environment, you're listening on a lower cost pair of headphones, you're listening to a crappier format. Let's at least make sure you have the best experience you can and that you can tell the difference between what good and better sounds like or what better and best sounds like. So I think that's the second thing. The other thing that I think is a positive about what you said is there's just so much music discovery because it's everywhere.

46:06And not everyone is going to turn into a music lover, and that's okay. But I think for young people who are discovering, I'm always amazed at the songs my kids are excited about because I'm like, you know that's not a new song, right? Like that's from when I was a teenager. And I think that's great. Like the way that the younger generation is doing music discovery is creating a love of music which is not bound by time or genre. And I think that's really cool. And our belief is that if you help people listen to that as best you can, they will get an appreciation for what better sound sounds like.

46:46And over time, they will graduate into the formats and the products that actually bring that to life in an amazing way.

46:55Nilay Patel:But that's music. And I appreciate that this is happening in music. I think the question I'm asking is about, honestly, about AI and the almost religious belief in Silicon Valley that AI, in particular, natural language input, will usher in a platform shift, right? Mark Zuckerberg has a religious belief that you're going to talk to Muse Spark through meta glasses. And whether or not you believe him, he is laser focused on that because he wants to stop being constrained by Apple's platform policies. That is the story that plays out in the pages of The Verge every single day. Apple probably believes this, right?

47:30Nilay Patel:Apple believes natural language input is some kind of enormous threat to the iPhone. They're reacting to it. Somewhere in there is, are you wearing headphones to talk to this? And can Bose headphones meaningfully participate in those ecosystems? Or will all of these companies create more first-party opportunity for themselves? I think both can be true. So I think we'll see if Mark is right. But that doesn't mean you want to have a crappy listening experience when you're listening to music. Do you take glasses off and put on headphones? Do you make the glasses sound better? I don't think that just because we have a utility, which is AI on the – so I'll just use phone calls.

48:12It's an old school example. Just because you can take phone calls on your headphones, if they didn't sound good to play your music, most people who love music would not wear those to listen to music. It's just the reality. And I think the same is true. It's a utility. and if you're someone who doesn't care so much about music and it's not part of your personal brand or your identity, you may say, that's good enough for me. It sounds, I can't tell the difference. But I think for most people, they will choose multiple devices or they will choose one device that can do all of it really, really well.

48:47And I still think there's room for high quality listening experiences, even in a world where we're all chained to our AI.

48:55Nilay Patel:So I'll just paint a picture for you. So if Xreal wins the AI race and all of us interact with Claude all day long through our Xreal glasses and the sound is powered by Bose through an audio tech partnership, is that victory? Is that success? Or is there more to be done? I think there's always more to be done, right? So when you think about how fast technology is moving, I think we're imagining experiences today that can be had at the edge that live within the compute constraints and the battery constraints that we have. And two years from now, those constraints are going to still be there, but the amount of capability you have will be bigger.

49:34I think we're going to continue to see innovation and invention in the space that's going to create experiences we haven't imagined yet.

49:40Nilay Patel:One of the things that I'm really curious about is just the amount of audio input all of these companies want to do. We had the CEO of Zoom on Decoder, and he was like, everyone will talk to AI avatars in Zoom, and all of us will be mediated by Zoom. And that means we got to record the in-person meeting, everyone has to wear the rings or the pendants, and we're going to record everything all day long so the AI can fully know us. I have a lot of thoughts about that, but that's one vision in the world, right? We're going to record everything, which sort of puts a lot of pressure on noise cancellation, on rehabilitating the audio once you have it, because there's just a lot of not just noise, but just damage that happens in the compression process and transmitting over the internet.

50:23Nilay Patel:That all seems like opportunity for a company like Bose. Is that where the investment is, is to help the AI hardware companies deal with lossy streaming and TikTok audio? How are you thinking about that opportunity? One of the things that we're learning as we further venture into the space is that the core problems are the same. If you take something like speech clarity, voice pickup, that is a world we've done a lot of research on, a lot of work on. It's an incredibly important part of a Bose headphone, for example. But it's also really, it turns out, important in a dozen other places where the same type of technology at its core can be expanded and extended to have a...

51:14So think about, I'm driving 70 miles an hour down the highway in my car. That same speech clarity technology is really relevant in the car in the same way it is in a headphone, in the same way that it is in a motorcycle helmet where you can imagine that's maybe the most hostile sound environment you could get. And so I think the same is true. Noise canceling has all sorts of varieties that I think are incredibly important in the AI examples that you talked about and in a lot of other everyday life examples where noise cancellation hasn't yet gone. So a great example of that is hearing aids. So as you know, we've been working on hearing aid technology at Bose for over a decade.

51:58And just this year, we launched the world's first hearing aid with a customer and partner called Orca in China that has noise canceling. And so it actually now solves what I think is the biggest problem that hearing aids have had for decades, which is my most challenged environment if I have some hearing loss is a noisy restaurant, for example. And a traditional hearing aid amplifies all of that sound. Noise canceling has always been the dream of hearing aids because if you could take the noise of the environment down and amplify the speaker, the person you're trying to have a conversation with, that's sort of the holy grail now because you're doing exactly what the customer really wants and needs.

52:45And that up until now has been impossible to do because in a hearing aid, you need 15 to 18 hours of battery life. You have very limited compute. It's been a really tricky problem. And, you know, for us, solving that problem was both about hardware, right, a new driver that actually fits in the ear canal but can power noise canceling, and the platform that we built to enable that at a low enough compute level that you could do it inside of a hearing aid over a period of 15 to 18 hours in a day. That's the kind of innovation for noise canceling, for example, where it's an obvious use case, but to get there required a considerable number of building blocks.

53:30Nilay Patel:I'm glad you brought up hearing aids. The last time I were on the show, you had a partnership, I believe, with Lexi. And after our conversation, I ran out and I bought my dad those hearing aids. After four years, he won't wear them because he says everything is too loud. Exactly the problem you're describing. But you exited that partner with Lexi and the parent company just announced a couple of weeks ago that they're leaving the U.S. market. They're out. You're describing hearing aids that you're making in China. Is there something particular about the U.S. market that just makes it too hard or are you going to reenter?

53:57No, we've been here with Lexi and they're going through some challenges. And so we'll find the right partner for us in the U.S. I think the over-the-counter hearing aid market has struggled more than any of us thought. if you go back four years. It hasn't taken off at the rate we had hoped that it would, but I still see a ton of opportunity in the hearing aid space. This hearing aid happens to be in China, but there's no reason that you won't see it in other places around the world. Why do you think it hasn't taken off? I think it hasn't worked yet. There are a couple factors. Again, we've been partnering into it, so we're not as close to the day-to-day of it.

54:36I think there's really two things. It is definitely cheaper and more accessible than it was in a prescription environment. But these are still very expensive products. So, you know, rounding about$1 ,000, which is a lot of money. And so I think in an over-the-counter space, most customers are expecting something that looks and feels more like what they would be willing to pay for a consumer electronics product, which is more like$200 or$300 or maybe$400. So while it's more affordable, it is not as affordable as I think the consumer wants or needs or expects. So I still think there's some work to do there from a technology standpoint to figure out how you bring it down.

55:17It's also not yet really in the insurance space. So if I get a prescription hearing aid that's covered in Medicare, that's covered by my insurance company, not the case for over-the-counter. And so I think there's just some affordability challenges we haven't quite fully solved yet. That industry has not yet solved yet. So that's one piece of it. And I think there's still a stigma part of it, right? There's just still a, I don't want to look old. I don't want to feel old. I don't want to wear a hearing aid. And until we figure out the right industrial design and make it more palatable, I think you still have resistance no matter the price point.

55:57Nilay Patel:The hearing aids my dad was most resistant to were when I tried to get him to wear AirPods after Apple had released that feature. He looked at me and said, absolutely not. So this is a particular area of convergence, right? What is an augmented reality hearing device except a hearing aid, right? Except a hearing aid with intense noise cancellation that can focus on the speaker in front of you and maybe translate them in real time if you don't speak the same language. you're talking to an AI and you just want to whisper so no one can hear you and it's talking to you, but you're still hearing everything that goes on.

56:29Nilay Patel:This is the convergence, right? The idea of headphones, the idea of augmented reality and the idea of hearing aids, they're in a Venn diagram and that center of that Venn diagram, I think is getting bigger and bigger and over time. I just come back to the same question. Is the culture of Bose designed to provide technology into all of the players in that ecosystem? Or are you still trying to win with the best product that hits the middle of that Venn diagram? We are always focused on who's the Bose customer and what are the features they want, right? As I've said a couple of times, like you can't fit everything in.

57:02That Venn diagram is getting bigger as compute is getting more powerful at the edge, but it's still limited. And as we add more and more AI, we talk about it at Bose as tiny AI, right? What we're good at is a lot of companies are good at really big AI, right? What we're good at is taking really complex algorithms and then figuring out how to shrink them down and take as little power and compute as they possibly can so that they can fit in our devices. But you're always constrained. So we're looking at what our customers are asking us for, what they need, what they want in that Venn diagram. Where do they want the emphasis to be?

57:39And that's where we're pushing our products. So you'll continue to see us do that. Other companies will choose a slightly different variation of that Venn diagram, and they'll look for a different feature set. And I think that's what makes the industry go, right? It is competitive by nature, and it is important to have a deep understanding of what the customer need is.

57:59Nilay Patel:Do you think that there's any pressure on Bose just from the product manufacturing side, right? There's tariffs. There's a lot of focus on what gets made in China. We talked briefly about protectability and whether or not you even want to sell into Chinese companies or Chinese OEMs who might turn around and take care of technology, which we have seen at scale with Apple and Tesla and others. Is it worth it to be chasing hardware at this time? Yeah. Look, I think since COVID, supply chain has become a more exciting environment. Sure. So it's been a series of things. And I think our perspective, you know, back then we said, look, we it's clear we're going to need to be more flexible and more agile in our supply chain.

58:45That I think became clear. And we've done a lot of work to get ourselves into a position where we expect curveballs now. We just don't know what they're going to be. And when they come, we've designed ourselves in a way that we can adjust quickly. And we think we're flexible enough to handle it. The world needs hardware as much as everyone is enamored with software and AI. And those are the things creating the magic, perhaps, on the hardware these days. But you still need physical things. We are a physical world. You need physical things. And we are going to continue to make physical things and roll with the curveballs that come our way.

59:27Nilay Patel:Have you moved manufacturing meaningfully out of China? We have, yeah. So we're diversified across Asia. We also have manufacturing in North America for some of our products as well. Have you moved anything meaningfully back to the United States? We have. The only thing we have in the U.S. is Macintosh. So all of our Macintosh products are built in Binghamton, New York. It's funny because those are the only products you have that also wouldn't benefit from the price cut of not having tariffs, right? You need to keep those prices really high. Have you thought about moving anything back to the United States to avoid whatever tariffs and bring prices down?

1:00:01We'll always look at it. And, you know, it's a fulsome economic equation of not just the economics, but also the expertise, right? Consumer electronics expertise from a manufacturing perspective moved to Asia a long time ago. And so it's both a cost and an expertise question. We look at it, we talk about it. If it ever makes sense, we'll do it. Right now, those things don't play out for us.

1:00:27Nilay Patel:I feel like I have to ask you about Bluetooth one more time here at the end of our conversation. I've waited. It is the limiting factor of so many things you are doing. It's the limiting factor of how you can connect to phones. It will almost certainly be the limiting factor of how all these AI devices work. The manufacturers have really put Bluetooth in a box. There is a wall around what it can do and what they will ever allow it to do on their platforms. And then there are their extensions. And this is across the board. I'm not even singling out one manufacturer. I used to always single out Apple, but now they're all doing it.

1:00:59Nilay Patel:So it's like, great, there's a wall around Bluetooth. For a company like Bose, which has to connect to phones, that is the limit. Have you tried to push hard to overcome that limit? Have the antics of the European Union helped you open up and overcome the limit? How has this played out over the last four years? Probably not terribly different than what we talked about last time. We partner, we push, we ask for what we want, and we work with what we have. So I think we are are always trying to test and push the limits as much as we can. And we're incredibly good at not using that as an excuse. So how do we create amazing experiences with the advantages that we have?

1:01:42And we think we're pretty great at doing that.

1:01:44Nilay Patel:The other side of this, you know, you've got Macintosh products or premium home products and people are disconnected. A lot of people still want to play Spotify off their phone onto their home stereo system. There's a joke we tell in our other show, The Verge Cast, where we just try to locate the computer. Where is the computer supposed to be here? Right? If you're playing music off your phone, is the computer your phone and you're just Bluetooth streaming to your speakers in the context of Macintosh, that just is like a heartbreaking crime. Like don't stream to your Macintosh system. That means the Macintosh system needs a computer, right?

1:02:17Nilay Patel:It needs to run some variant of a Spotify app that has Wi Fi that It pulls lossless down. That means it needs RAM. Like the whole thing immediately becomes a computer. Maybe a somewhat low-powered computer that's only focused on a handful of apps, but a computer. And then you have all the carrying costs of a computer, right? Software updates and application updates and Spotify changes its file formats. Whatever is going to happen, you've got some problem there. How do you think about that, right? Because that, across all of your products, the amount of compute going into them is going up, as you've described.

1:02:51Nilay Patel:Maybe in tiny ways, but it's going up. And then you're not charging service fees. So how does that all work as more and more of your products fundamentally become network computers? It's a great question that we always wrestle with, right? This, you know, I think consumers are subscriptioned out. I think that the idea that you're going to create a subscription service over and over their update that they're going to pay for on a monthly basis is just not – I think that's not coming in our space. And so we have to kind of think long term as we're selling products today. What is the software, compute, cloud storage, all of the security, all of the costs that live across the lifecycle of that product that we're going to have to support?

1:03:34And we have to build that into the cost of maintaining that product, right? Which is different than what you would have done in the past. We've made some design choices, I think, that are important as well. We don't need to duplicate what Spotify is doing either. And so, you know, as we think about the lifestyle collection products that we just launched, what we heard overwhelmingly from our customers was, I just want to go to my music. I don't understand why I have to deal with you. I love how this sounds, but like, please just get me to my music faster. And so we thought a long time about how best to do that in the home.

1:04:16And we think about it in our wearables, too. And so we want you to be able to control your home speakers through Spotify or AirPlay or however you want to do that. And that offloads some of that from Bose, which is good. We also just made an acquisition of a company called Stream Unlimited. And their business is to connect to all of the streaming apps, devices, et cetera, that allows a smart home device to have those easy connections. that gives us some scalability and some participation in that orchestration layer, which is also helpful for us. So we come at the problem in a couple of different ways.

1:04:53Nilay Patel:There's rumors in a few months or weeks here that Apple put out a whole bunch of new smart home devices. OpenAI might put out a smart home device. Obviously, I have Google ones and there's Amazon ones. You ask any of those companies, what are the number one and two things people ask for from their assistants in their house? And it's setting timers and playing music. and then everything else is a long tail of almost nothing. Like the drop-off is enormous. You know, if you want to play music and you've got a great stereo in your house, you've got to go connect to their smart home system. Now you're on their network and now you're just another endpoint for whatever forthcoming successful consumer AI agent will exist.

1:05:31Nilay Patel:Big question mark there, but I'll just, let's say it happens. That further commodifies you, right? That's like yet another time when they're not going to use your interface or your streaming. They're just going to say out loud in their home and the OpenAI device will be like, I found some speakers on your network. I'm playing the music for you. Do you need to participate there? Do you need the OpenAI agent to say, I'm playing it on your Bose speakers? And then you collect a tiny little licensing check back or like, how should that work? I don't think so. I think, you know, we understand there are a lot of components in this chain and customers think about Bose for amazing sound.

1:06:10and when they're playing the speaker and they're asking whatever agent they're asking to play it there is an appreciation there's going to be a logo on that speaker you know if you have a new bose lifestyle speaker there's gonna be a logo right on the front of it you're going to look at it every day in your kitchen or your living room or where i have a feeling these logos are about

1:06:29Nilay Patel:to get bigger and start like you can see it coming we're not going to make them that big so that chain is long and in fact you launched another piece of the chain of music which is you launch Studios, which feels like a record label, a marketing venture for new artists. How does that play into it? So bigger than a record label, not just a record label, but that's a piece of it. So think about Bose Studios as a way to connect with our customers and give them new avenues to participate with us. And if you look at it, the announcement may feel like a sudden thing, But if you sort of look at what we've been doing at Bose over the last four or five years, we've been moving in this direction.

1:07:12You know, getting the attention of consumers is hard. You don't do that with traditional advertising anymore. Consumers are engaging with content, and that's it. And so we've been building more and more content. We've been partnering with more and more creators. We've been dipping our toe in this water for the last several years. So I'll give you a couple of examples. We we've been partnering with NME to do their their mixtape where we're helping them bring undiscovered up and coming artists to the forefront and helping bring those artists and celebrate those artists that we've learned a lot from doing that.

1:07:51The connection and the participation of our customers with that content and with those artists has been incredible. We've been sponsoring an event, Chris Brickley Invitational, which is this amazing basketball event for high school basketball players. It is becoming the place to go if you're a all-American type high school basketball player, both on the men's and the women's side. And that event has turned into something so special. It is a we're not talking about kind of major we're not putting on a new Super Bowl over here, but we're we're we're we're participating in content creation in a way that connects with our customers.

1:08:32We think that's really important. We also like this idea of up and coming creators who need support to launch their careers. We're such a independent at Bose. We say fiercely independent. There's something so unique about our structure and and the independence that we have. We kind of like the idea of supporting this up-and-coming group. It supports our connection with our customers, and we think we're helping them along the way as well.

1:08:59Nilay Patel:I feel like I could spend another full hour just talking about the economics of the music business and brand-supporting creators in this way. But sadly, you've already given us too much time. Lila, thank you so much for being on Decoder. Thank you for having me back. I'd like to thank Lila for taking time to join Decoder, 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 decoderattheverge.com. We really do read all the emails. Or you can hit me up directly on Threads or Blue Sky.

1:09:26Nilay Patel:We're also on YouTube. You can watch full episodes at DecoderPod. And we have a TikTok and an Instagram. Same handle, at DecoderPod. We're a lot of fun. If you like Decoder, please share it with your friends and subscribe wherever you get podcasts. Decoder is a production of The Verge. I'm part of the Boxing Media Podcast Network. The producers are Greg Ott, Kate Cox, and Nick Statt. This episode was edited by Kabir Chopra. Our editorial director is Kevin McShane. Decoder Music is by Breakmaster Sander. We'll see you next time. Close your eyes, exhale, feel your body relax, and let go of whatever you're carrying today.

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