Vizio put out a press release a few months ago for two of its 42" LCD HDTVs, touting in the headline, that Vizio is, "ONE OF THE FASTEST GROWING FLAT PANEL BRANDS IN THE U.S."
On the surface of things, that's not such a bold claim - after all, who the heck are these guys, anyway? They came from nowhere, so of course they're growing quickly. When you sell nothing one year, and something the next, your growth rate looks fantastic. So, growth by itself is not necessarily a meaningful statistic. Perhaps all the newcomers, slapping a moniker onto an LCD panel sourced from a Chinese factory somewhere, are all growing and doing well at the expense of the established brands.
However, the AP had an article in same timeframe suggesting the opposite: that consumers are buying flat panel TVs, but only from major brands:
Makers of slim TVs are struggling with higher inventories, but the extent of the problem depends on each company's position in the market: Smaller names are facing a glut of flat-panel screens while most of the top players say they're playing catch-up to avoid shortages.
So Vizio is bucking a trend here. The new LCD TVs explain why. They’re reasonably feature-rich, and very well priced. But so is a lot of the competition. What’s important here is that the channel itself is a key part (perhaps the key part) of Vizio’s business model. Traditional big box retail (Best Buy, Circuit City) places a premium on brand: getting shelf space is extremely difficult, but once on the shelf you have to compete with Sony and Samsung. This is what the AP is talking about, and it helps explain why Sony, once it got its act together with some decent products, is now back on top of the game. Sony's brand stands for high quality televisions at a moderate premium; that's precisely what the Bravia line delivers, and consumers are buying them. (In September, the L.A. Times reported that Sony has regained its position as the U.S.' top TV manufacturer after falling behind in the late 1990s due to its slow recognition of flat-panel TVs. Sony's entrance into the LCD market has helped the company increase its share of the total market to 28%.)
So what's going on with Vizio? The key is distribution: Vizio aimed beyond the big box stores, instead targeting a different, even bigger "big box": warehouse clubs. Costco in particular is a happy home for new discount brands because the warehouse chain mixes in high end brands with relative unknowns; launching your plasma at Costco does not automatically equate your brand with discount merchandise.
Of course, in terms of sheer volume, the biggest game-changer of all may be Wal~Mart, not the warehouse clubs or Best Buy. As prices drop on flat panel TVs -- easily the most desired big ticket CE item -- more of them end up in the land where there are Always Low Prices. Vendors who can make peace with Wal~Mart's margin and distribution requirements (and sometimes hyper-competitive house brands) will be able to grow their sales volumes tremendously. They may even be able to build a brand where they have none - but it won't be a premium brand.