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The next Sony is Vizio

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This post is part of my series featuring established companies and the smaller, more aggressive or innovative rivals that may eventually succeed them.

Who would have thought that privately held, 2002 upstart Vizio could upset the LCD TV market and knock giant Sony (NYSE: SNE) off of its perch?

The world of televisions is transforming itself to flat-panel, high-definition and big screens. Vizio was founded in 2002 and is taking major market share from Sony and former second fiddle Samsung. Vizio's promise to its customers is simple -- small is big. The company has only 85 employees, mostly in sales and marketing, and outsources the manufacturing to other suppliers. The key to the Vizio story is getting the product through as many retail doors as possible.

The company has signed up a couple of big wigs in the retail sales channel: Wal-Mart (NYSE: WMT) and Costco (NASDAQ: COST), to go along with Sears (NASDAQ: SHLD) and Circuit City (NYSE: CC). Vizio is also available from Dell Computers e-commerce web site (NASDAQ: DELL). Vizio understands it's all about distribution, distribution, distribution.

Vizio has taken the marketing position that television decisions typically are the domain of the male of a household and, as such, has partnered up with the NFL. Football and big screen TVs are synonymous. Vizio has signed All-Pro running back LaDainian Tomlinson of the San Diego Chargers to be its spokesperson. Tomlinson is regarded as both a fine gentleman and perhaps the greatest running back since Barry Sanders. His wholesome image is magical to Vizio's marketing program.

Vizio offers the lowest prices for the new LCD TVs. The company operates with low overhead and very effective, but low-cost marketing plans. Recent market share numbers show Vizio at 14.5%, easily topping Sony. Vizio's actual numbers are hard to find but the 2nd quarter of 2007 saw the company sell 606,000 units, up 76% from the previous year, while Sony fell from 412,000 units to 253,000 units in the same period.

Vizio has managed to capture the lion's share of new unit sales, but has not disclosed its profitability numbers. The margins in the industry are thin to begin with, which explains Vizio's low expense structure.

Still, it's hard to imagine this young company knocking Sony around the block. Now Sony knows what it's like to tackle LaDanian Tomlinson!

Georges Yared is the editor of GameOnInvesting, a free service devoted to helping investors spot game-changing stocks before they breakout.

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Last updated: November 09, 2009: 01:13 AM

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