The Future of Bose: How AI is Transforming Headphones

Today, I’m chatting with Lila Snyder, the CEO of Bose, a brand you likely recognize as a titan in consumer tech. Founded 60 years ago, Bose began by selling speakers and has since become a leader in car audio and noise-canceling headphones, thanks to its commitment to research and development.

Lila last joined the conversation about four years ago, and since then, she has significantly reshaped the company. While the emphasis on research remains, she has divested Bose Professional, acquired high-end audio brands like McIntosh Labs and Sonus faber, and, crucially, started licensing Bose technology to other companies.

This shift means that while you can still purchase Bose soundbars and headphones, the company is also branching into B2B, allowing Bose tech to be found in products from brands like Skullcandy and Epson.

This transformation brings new structural challenges as Bose evolves into a software company alongside its product offerings. Lila and I discussed how this transition is unfolding and whether it’s a response to the potential rise of AI wearables—devices that may resemble headphones and require advanced audio processing for voice input.

Is Bose positioning itself to supply technology to emerging companies that could disrupt the headphone market? Or does Lila have a strategy for a headphone sector already shaken up by phone manufacturers like Apple and Samsung, who have made their own products, such as AirPods and Galaxy Buds, more competitive?

We delved into these topics, and Lila was candid about the hurdles and opportunities ahead. As a self-proclaimed audio enthusiast, I thoroughly enjoyed our discussion, and I hope you will too.

Let’s dive in: Bose CEO Lila Snyder.

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Lila Snyder, welcome back to the show!

Thank you! I’m thrilled to be here. It’s hard to believe it’s been four years since our last chat.

A lot has changed since then. Bose has made acquisitions and divested some divisions. The concept of headphones remains similar in some respects but is evolving in others. How do you view Bose today?

We’re really enjoying what I’d call our second chapter of transformation since I joined. While many things remain the same—like our commitment to creating exceptional products and advancing technology in both consumer and automotive sectors—two fundamental changes have occurred as we look to the future.

For 60 years, we were solely Bose, but now we’re a multi-brand company. As you mentioned, we’ve acquired brands like McIntosh, a legendary audiophile name with a 75-year history, and Sonus faber, known for its Italian craftsmanship and over 40 years of heritage. This expansion has allowed us to enter the luxury audio market.

The second major shift is that while we’ve always been a product-focused company developing technology through extensive research, we’ve now added a technology division called Audio Tech. This allows us to take our innovations and apply them in new contexts.

We believe sound is becoming increasingly vital, especially with the proliferation of devices that utilize audio—whether for music, voice, or noise cancellation. Many of these products aren’t ones Bose would typically create, but we’re committed to bringing high-quality audio to as many applications as possible.

Last time we spoke, you were in the midst of restructuring to create a more functional organization. You mentioned centralizing the engineering team, which is crucial to Bose. Now, with the Audio Tech division, it seems like a natural extension of that effort. Who are the customers for this new division?

It’s a B2B2C model. Our customers are large companies that bring products to market. For instance, we’ve partnered with Motorola to enhance their earbuds and improve the sound quality of their phones.

We’re also collaborating with Xreal, who are developing innovative XR glasses where sound plays a critical role. You’ll start to see Bose technology integrated into various sectors, from mobile devices to computing and other audio products.

Recently, we launched a motorcycle helmet communication device in partnership with Sena. We’re excited about the diverse applications for our technology, which is broadening our approach to invention and research at Bose.

I want to touch on that because it represents a significant shift. The introduction of new customers alters the company’s focus. Many audio brands partner with device makers and automakers, but often it’s just a logo on a product. Bose has prided itself on being more than just a logo. What distinguishes a product like Xreal glasses powered by Bose from simply having the Bose logo on it? Is the logo always included?

While this is a new direction for Bose, it’s similar to our longstanding automotive partnerships. We have a model for this within the company, and we’re expanding that thinking into new areas. Our primary focus is on selling technology, which is key. In some cases, we also sell the brand. You might find technology in a product without a “Sound by Bose” or “Powered by Bose” label, or it may include the logo, but you’ll never see the logo without the technology.

Some partners value the brand, while others do not. We discuss with each customer whether it makes sense for both parties to include the brand. When you see our logo, know it’s a thoughtful decision tied to the technology inside.

Can you share more about those discussions? Is it cheaper to include the brand, or does it come at a premium? Bose has a strong brand presence, which might overshadow some customers. How do you navigate that?

As you’d expect, both the technology and the brand come with licensing fees. We’ve invested over 60 years in building our brand, which we consider one of the most iconic in the audio space. We’re very selective about where we place our brand, and it certainly isn’t free.

Speaking of iconic brands, McIntosh has a unique reputation. As a stereo enthusiast, I’ve always admired their blue meters. How do you maintain the integrity of McIntosh while integrating it with Bose, which is more of a premium mass-market brand?

We view McIntosh and Sonus faber as distinct brands, each targeting passionate fans. When we decided to enter the luxury audio market, we took great care to protect these brands. We established a separate luxury audio business unit to ensure that we don’t dilute their identity.

We have no intention of creating lower-end products under those brands. We believe both markets are exciting, and we’ve been in the premium audio space for a long time. Our luxury audio strategy allows our engineers to explore higher-end technology that may not fit into our traditional product lines.

We also see a significant opportunity in the luxury market, where audio has been underrepresented compared to other luxury categories. We believe there’s a chance to attract new customers by offering a luxury experience that emphasizes sound quality, design, and craftsmanship. Our luxury products are handmade, crafted with care, and designed to be as much art as they are audio equipment.

I’ve noticed some brands, like McIntosh, have partnered with automakers like Stellantis for their audio systems. It seems like a mismatch to me. Was this a strategic move for you, or did you see an opportunity to elevate the brand without compromising its integrity?

We weren’t actively seeking brands to acquire; instead, we recognized a strategic opportunity in the luxury audio space. We wanted to create something new and exciting, and we knew we needed brands with a strong heritage to build upon.

Both McIntosh and Sonus faber have passionate followings, and we saw potential to elevate them further. That’s how we ended up acquiring the McIntosh group.

How integrated has their engineering team become with Bose, or do you keep them separate?

We’ve integrated their engineering team into ours while maintaining some separation. For instance, Bose has a distinct sound signature that consumers expect. We’re careful to preserve the unique sound of McIntosh and Sonus faber products, ensuring they maintain their identity.

Initially, we focused on protecting what we acquired. We have a dedicated engineering team for luxury products, and we’re gradually incorporating Bose technology where it makes sense. For example, we can enhance software and connectivity without compromising the core sound quality.

I’m curious about the luxury market. High-end audio has faced criticism for being overpriced without significant innovation. How do you ensure that luxury products offer real value rather than just a premium price tag?

The value lies in the sound quality. I encourage you to visit us at Bose and experience a McIntosh or Sonus faber system. They deliver an audio experience that’s truly exceptional and distinct from what you’d find in a typical premium product.

Part of that value comes from the technology itself, which often leans more analog, providing a different sound signature. McIntosh is known for its powerful output, which is essential for Sonus faber speakers. You’re also paying for design; these products are crafted to be visually stunning.

We recently launched the MA2375 integrated amplifier for McIntosh, which features a retro design with vacuum tubes. It’s not just a piece of equipment; it’s a statement piece for your home. Similarly, Sonus faber products are like exquisite Italian furniture, handmade with natural materials that are as much about artistry as they are about sound.

You’re describing a diverse range of customers, from B2B clients to luxury consumers. Convincing high-end audio customers of the value of premium products has always been a challenge. Do you think the B2B side will distract from your core technology roadmap?

It’s definitely more complex, but we’re prepared for it. Since our last conversation, we’ve solidified Bose’s foundation and are now building on it. We’ve developed a robust marketing and brand infrastructure that supports three brands instead of one, allowing us to leverage our capabilities across all three.

The key is clarity about our customer base, which we’ve worked hard to define for Bose, McIntosh, and Sonus faber. We’re clear on our mission for each brand, and as we expand into B2B, we’re finding that it actually enhances our core technology development.

In the past, we focused on creating technology for specific products, but now we’re developing foundational technologies that can be applied across various products. This shift is creating efficiencies in research and development, allowing us to innovate more rapidly.

How is Bose structured today?

We operate with a hybrid model that includes both business unit and functional structures. Core functions like engineering, marketing, and supply chain support all our businesses, while we also have four business units, each led by a president who draws on global functions as needed.

How many employees does Bose have now?

About 2,500.

Are you primarily based in Framingham, or do you have a global presence?

We’re global, with operations all over.

You mentioned a hybrid structure. How is that divided among engineering, sales, and other functions?

I don’t think about it in those terms, but I do know that half of our employees are engineers.

As you modularize components within the company, you can build new products more quickly. This often leads to an increase in engineering staff. Are you investing more in engineering?

Absolutely. We’ve been transitioning from hardware to a combination of hardware and software, and now to more software-driven products. This shift is leading to growth in our engineering team, and we’re seeing increased productivity as we adopt more sophisticated tools, including AI, to aid development.

When you sell to B2B clients, are you primarily offering algorithms? How do you protect that intellectual property?

We’re selling three main components: software, systems engineering, and services. Systems engineering is a key differentiator for Bose, as it involves integrating hardware and software to create a cohesive user experience. This expertise is valuable not only for our products but also for our B2B clients.

How do you balance the risk of commodification in your technology? If you’re using the same foundational components across products, how do you maintain innovation?

I believe the product experience is more than just the ingredients. For example, while some technology may be shared, the design, comfort, and features of headphones can vary significantly. We focus on creating unique experiences that resonate with our customers.

As we develop AI capabilities, we emphasize “tiny AI,” which involves optimizing complex algorithms to fit within the constraints of our devices. This approach allows us to innovate while still delivering high-quality audio experiences.

How do you make decisions at Bose? What’s your framework?

I believe in gathering the right people, engaging in intense discussions—even uncomfortable ones—and making decisions quickly, knowing we can pivot if necessary. We focus on both reversible and irreversible decisions, moving fast while being mindful of the potential consequences.

With the rise of AI, how do you see the future of audio devices evolving? Will they become more integrated with AI systems?

We believe wearables will play a crucial role in the AI future. The form factor will likely vary, with consumers choosing devices that suit their preferences. We see our involvement in the audio tech space as a way to participate in various applications, ensuring we remain relevant.

As AI technology advances, we anticipate a proliferation of devices, and we’re committed to ensuring our products can interface with these systems. While there may be advantages to staying within specific ecosystems, we believe consumers will still seek out high-quality audio experiences.

Is this strategy a way to hedge against uncertainty in the AI landscape?

Absolutely. We’re diversifying our approach while remaining true to our brand identity. Bose is synonymous with quality audio, and we want to ensure that any new ventures align with that core value.

As a music lover, I worry that tech companies prioritize convenience over quality. How do you see this trend affecting the audio industry?

We’re noticing a growing appreciation for high-quality audio experiences, especially among luxury customers. Many seek moments of clarity and connection with music, stepping away from the chaos of the digital world. We believe that by providing exceptional sound experiences, we can foster a deeper appreciation for music.

While convenience is important, we’re committed to ensuring that our products deliver the best possible audio experience, regardless of the environment or device.

As we look to the future, how do you see the convergence of audio, augmented reality, and hearing aids evolving?

We recognize that these areas are increasingly interconnected. Our focus remains on delivering high-quality audio experiences tailored to our customers’ needs. We’re exploring how AI can enhance these experiences while ensuring that our core values remain intact.

What about the challenges of manufacturing and tariffs? Are you moving production out of China?

We’ve diversified our manufacturing across Asia and have some production in North America, specifically for McIntosh products. We’re always evaluating our manufacturing strategy to ensure it aligns with our business goals.

Finally, let’s talk about Bluetooth. It’s a limiting factor for many audio products. How do you navigate these constraints?

We continually push the boundaries of Bluetooth technology while creating exceptional audio experiences. We focus on leveraging our strengths to deliver the best sound possible, regardless of the limitations.

As we wrap up, I want to touch on your recent launch of Bose Studios. How does this initiative fit into your overall strategy?

Bose Studios is more than just a record label; it’s a way for us to connect with our customers and support emerging artists. We’ve been building content partnerships to engage consumers in new ways, recognizing that traditional advertising is no longer effective.

By supporting up-and-coming creators, we’re fostering a connection with our audience and reinforcing our commitment to music and audio culture.

Thank you for sharing your insights, Lila. It’s been a pleasure having you on the show.

Thank you for having me back!