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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Reader Comments (Page 2 of 2)
7-06-2008 @ 1:04AM
Peter Lengyel said...
TV buyers, please take a good look at the return goods area at both Costco and Sam's Club......you'll view a full spectrum of Visio TV's. It matters not what day or time of day Visio TV.s are being returned enmass.
7-07-2008 @ 12:45AM
eric said...
Some of these comments sound like they were made by Sonydealers. I bought a 37" Vizio from Costco about 6 months ago and haven't had a single problem problem with it. setup was super easy,just make sure you buy a good quality powered HDTV antenna and you are in a good signal area. Folks that complain about a fuzzy or distorted picture most likely have not set up the tuner properly or have the unit connected to crappy analog cable. Although the color is not quite as good as the Sony,which is the best in the industry, it's overall picture is very comparable,for hundreds of dollars less. After talking with several dealers,the general consensus is that repairs on the Vizio are few and lemons(total unit failures) are very rare. If you want a plasma stay away from Samsung,Sony and Vizio, go with Panasonic or Pioneer the only plasma sets worth considering. Nontheless, the Vizio is an uncommon value.
7-07-2008 @ 1:19AM
eric said...
Peter L. said " TV buyers, please take a good look at the return goods area at both Costco and Sam's Club......you'll view a full spectrum of Visio TV's. It matters not what day or time of day Visio TV.s are being returned enmass."
This is primarily due to Costco's very liberal return policy- a full 90 days with full refund, no questions asked-even Walmart,the king of no hassle returns,does not offer this good a policy. Most folks decide they want to spend $500 more and get the Sony or only a few hundred more to get the Toshiba which,admittedly are better sets in the long run.
7-07-2008 @ 1:45AM
eric said...
A final word of warning: If you are buying a new HDTV,be it LCD or plasma,Vizio or Sony or other only to connect it to poor quality analog cable tv,YOU ARE WASTING YOUR MONEY! HDTV sets look crappy,often worse than analog tube sets in this regard. If you don't plan to connect your HDTV set to a digital signal such HD Directv or Dish Network HD or DVD via HDMI or over the air HDTV antenna or full(HDMI output) digital cable tv, save your money
7-07-2008 @ 12:01PM
lorraine said...
I bought a Vizio plasma 50 inch a couple years ago ran beauiful til it died, no picture just sound nice if its a radio. When u pay over two thousand for a tv u expect it to last longer that two years. They said (repairman) the high voltage blew and fuse didn't protect other boards in set. I don't know other plasma tvs problems but I do know Vizio....Plus parts are a problem...think think and think somemore
7-07-2008 @ 4:18PM
john said...
I work for a major wholesaler and when the vizio first came out, they were none stop returns and complaints on them!! And still i hear things that some of the vizios only lasting 6-18 months and then the screen will go black and the tv is done! I think the tv is a much better then yrs ago! But still would not recomend them for the money! I have heard that vizio was started from someone who once worked for sony! So i think one day they will take top rate for quality like that of sony!
7-09-2008 @ 2:24PM
Mike said...
I work for Costco and will tell you Vizio is the number 1 returned TV period. Spend a little more now or throw the Vizio out in a couple of years.
7-09-2008 @ 2:32PM
Mike said...
Vizio was started by a Big-Wig who used to work for Gateway, not Sony.
8-04-2008 @ 3:32PM
S Mae said...
DO NOT BUY VIZIO. Our 37 inch LCD - has major trouble....cannot get the sound functioning properly - input jacks are shot - after only 2 yrs and it was only warrantyed for 1 year. Called the service line - got no help - asked a local repairman about looking at it. Found out that Vizio will not allow outsiders to work on their product.
I can get a technician to come out for about $650 to diagnose the trouble. I already know what the trouble is....it is a horrible product. Gonna replace it with a Sony asap.
9-02-2008 @ 2:31AM
Adam said...
I used to work for Sharp and sold TV's for awhile at both CC and BB. It is easily apparant that VIZIO is a low end brand. Even to the untrained naked eye you can easily see the picture quality difference between a Sony or Samsung vs a VIZIO. I would never waste my money on a vizio. First the response time is slow (forget about watching sports or fast action scenes), the contrast ratio is small (so much for those deep blacks and bright whites), and the picture is just lacking when you compare a Samsung or Sony or even the Sharp. And I am not led by others opinions or you would hear me singing praises about Sharp. The motivators and trainers at Sharp couldn't convince me that Sharp was better than Sony. Only thing I liked about Sharp was I could buy it for 40% of the retail price as an employee.