Costa Mesa-based V Inc.,better known as Vizio,has quickly become one of Orange County’s largest private companies by tapping into the country’s insatiable thirst for big flat-panel TVs.
In four years, Vizio has become a top 10 maker of flat TVs and is set to see $600 million in sales this year, up from about $150 million last year.
That puts Vizio among OC’s 15 largest private companies by yearly sales.
William Wang, who used to run local computer monitor companies MAG InnoVision Co. and Princeton Digital Corp., is behind Vizio.
Wang declined to talk for this story. The strategy of the Taiwan native is similar to that of his monitor days: design and market here and let Asian factories do the heavy lifting.
Vizio has grabbed market share by building surprisingly inexpensive TVs that still win critical reviews.
The company expects to see more growth, spurred by advertising and new products. It hopes to hit at least $800 million in sales next year.
The challenge: holding its own against the powerhouses of the consumer electronics world.
“They haven’t been around as long as many of the tier-one companies,” said Paul Gagnon, a research analyst at DisplaySearch LLC in Austin, Texas. “They’ve made a pretty big impact pretty quickly.”
Grabbing Market Share
A year ago, Vizio ranked around No. 15 in plasma and liquid-crystal display sets. Now, it’s No. 7, according to DisplaySearch.
That means Vizio is grabbing sales from Sony Corp., Samsung Corp., Matsushita Electric Industrial Co.’s Panasonic and other big names.
Vizio sets use the most critical components and skip others that customers may never use, said Jeff Schindler, Vizio’s vice president of marketing and operation.
The company doesn’t include cable TV tuner cards found in some sets after executives saw many consumers relied instead on cable set-top boxes.
Vizio also has been slow to add the “next level” of high-definition screens. Hardly any programming has been available, but a new model may carry the screens in the next several months.
“There are bells and whistles nobody can use,” Schindler said. “What we focus on is picture quality.”
Then there’s price.
Vizio’s 50-inch plasma TV came out a few months ago at $2,000 vs. $3,000 to $3,500 for other brands.
The company has relied on club retailers for much of its growth, according to DisplaySearch’s Gagnon. They include Costco Wholesale Corp. and Wal-Mart Stores Inc.’s Sam’s Club.
These stores fit Vizio’s model: quality without frills and at lower prices than big electronics chains such as Best Buy Co.
Costco and Sam’s Club are more interested in volume than the fattest profits, making them the ideal retailer for Vizio, Gagnon said.
At the same time, the Samsungs of the world can’t put too many sets in Costco and Sam’s Club or risk the ire of big electronics retailers.
Vizio relies on shipping Schindler describes as “before just-in-time.”
He said he scours sales around the country and gives Vizio’s contract factory in Asia updates two and three times a week.
“Before it arrives in the U.S., it is sold,” he said. “I would rather be short than long.”
That’s helped the company turn inventory every three weeks or so, he said. Others may move TVs half as quickly.
Vizio has one of the leanest staffs around.
The company has roughly 40 people, or about one for every $15 million in sales. The ratio reflects the company’s setup as a design and marketing arm for Asian-made sets.
Vizio outsources a good portion of its engineering, all of its manufacturing and much of its logistics. It has some sales staff, though it deals with just a handful of retailers.
The biggest growth in employees has come from customer service and some administrative help.
The company should have about 75 people in the next year, Schindler said.
Vizio could be playing catch-up when it comes to customer service. The Better Business Bureau gave the company poor marks in the past, but they have improved.
Marketing Plans
Meanwhile, Vizio is trying to be more than just a low-cost brand. This year, the company has started to spend millions of dollars on advertising to make its name known in a market cluttered with more than 20 players.
The big decision for the company is how to grow from here. It recently landed a supply deal with BJ Wholesale Club Inc. in Natick, Mass., a warehouse retailer popular on the East Coast. It also put a few LCD sets up for sale at some Wal-Marts.
But there aren’t a lot of warehouse clubs left to tap. Working with other retailers could crimp Vizio’s low-cost model.
“At some point you have to add new retailers eventually,” Gagnon said.
Competition with big players stands to heat up as Vizio expands. Other small TV makers could try to copy Vizio’s model, squeezing the company from both sides.
Whatever happens, the market’s growth is impressive.
Global growth for LCD TVs is expected to double this year and expand by 54% in 2007. Plasma sales are set to grow 68% this year and 36% next year.
