Monday, October 6, 2008

Small Name in TVs Has Big Plans

By JASON TAN
Published: October 5, 2008
New York Times

http://www.nytimes.com/2008/10/06/business/worldbusiness/06vizio.html?_r=1&scp=4&sq=jason%20tan&st=cse

TAIPEI, Taiwan — Buoyed by success in American stores, the TV company Vizio is hoping to expand to other countries.

Vizio, which is based in Irvine, Calif., is considered a third-tier electronics brand behind better-known names like Samsung, Sony, Sharp and Panasonic.

But in terms of sales in the United States, the brand ranks right behind Samsung and Sony. It has grabbed almost 10 percent of the market by getting its LCD TVs into Costco Wholesale, Wal-Mart Stores, Sam’s Club, Circuit City, Target and Sears and pricing the TVs at less than the better-known brands.

“Put Sony and Vizio flat-panel TVs in a row and cover up the logos, and most people wouldn’t be able to tell which is which,” said Alpha Wu, chairman and chief executive of Amtran Technology, based in Taiwan, which owns a 23 percent stake in Vizio. Amtran makes more than 80 percent of Vizio’s TVs, Mr. Wu said.

“The attractive price tags are made possible by a lower overhead,” Mr. Wu said.

It is giving the company ideas. It plans to expand into Japan, China and Europe. In August, Vizio began selling a 42-inch LCD TV in Costco stores in Japan for 99,000 yen ($930). At a price at least one-third cheaper than Japanese brands, the first batch of 400 sold quickly.

Vizio will start selling TVs in Canada this year. It plans to sell TVs in China and Europe by 2010, Mr. Wu said. “We are a small company focused on what we do best. When we grow, we will slowly move into other markets.”

The risk is that a low-price strategy may not lead to long-term success. Olevia, made by Syntax-Brillian, was pushing its way into the top sales ranks several years ago. It outlined big plans for greater success. It recently filed for bankruptcy protection.

Sony and Samsung heated up the competition this year by also cutting TV prices, with Samsung introducing a value line of TVs for the mass market.

The aggressive moves kept Samsung, based in Seoul, South Korea, at the top of the North American market in the second quarter, according to statistics from the researcher DisplaySearch.

“Pricing strategy may be effective for a certain period of time, but it may not last long,” said Peter Liu, a senior director at Samsung Taiwan. “Brand recognition is what counts.”

George Chang, an analyst with Citigroup in Taipei, said that Vizio would lose attractiveness if first-tier brands cut their prices. “It will have to maintain the price gap to stay competitive.”



This article has been revised to reflect the following correction:

Correction: October 7, 2008
An article and a headline on Monday about plans by Vizio, a seller of televisions, to expand into new countries referred incorrectly to the company and its ambitions. Vizio is based in Irvine, Calif., and hopes to expand to other countries based on its success in the United States. It is not a Taiwanese company that is considering worldwide expansion because of success in the American marketplace. (A Taiwanese company, Amtran Technology, owns a 23 percent stake in Vizio and makes more than 80 percent of Vizio’s TV sets.)

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