Like 93 million other people, Jeff Schindler spent Super Bowl Sunday watching the big game, cheering on his team.
But Schindler wasn’t pulling for the Chicago Bears or even the Indianapolis Colts. He was cheering for the TV itself,a 50-inch Vizio high-definition flat panel.
Costa Mesa-based Vizio Inc. is growing fast as a maker of low-cost flat-panel TVs. This year, the company projects sales of $2 billion, up from $704 million last year.
The growth has prompted Vizio to move its headquarters to a 27,000-square-foot Irvine building that’s triple the size of its Costa Mesa space.
The company, which designs and markets TVs made in Asia, has started moving its 60 workers with plans to grow to 100 in Irvine.
The company wanted to stay in Orange County, where founder William Wang has long ties dating back to his days selling computer monitors.
Vizio, which also outsources shipping and distribution, plans to stay lean, according to Schindler, vice president of marketing and operations.
“One of our goals is to have the lowest overhead of anyone in the market,” he said.
One of the company’s biggest costs is advertising, according to Schindler.
In five years, Vizio has grown from an unknown to a top seller of flat TVs, alongside big names such as Sony Corp., Samsung Corp. and Matsushita Electric Industrial Co.’s Panasonic Corp.
The company’s tactic: strip down sets to their most basic components and work closely with stores,mostly warehouse clubs,on prices.
Doing so allows Vizio to sell plasma and liquid-crystal display TVs for hundreds of dollars less than big competitors.
“People look at our TVs side-by-side with the big brands and it looks just as nice, sometimes better, and our pricing is much more aggressive,” Schindler said.
Taking a Page
If the business model sounds familiar, it is. There are parallels to automaker Hyundai Motor Co., which mixes U.S. design with South Korean manufacturing muscle to make cars that sell for less than Japanese rivals.
Even closer, Vizio’s strategy echoes that of an earlier venture of founder Wang. Before starting Vizio, Wang was behind local computer monitor companies MAG InnoVision Co. and Princeton Digital Corp.
The monitor makers essentially served as U.S. sales and marketing arms for Taiwanese monitor makers.
As with cheap monitors, Vizio is going after volume.
Low costs,and low prices,have been a huge factor in Vizio’s growth, said Paul Gagnon, the San Diego-based director of North American TV market research for DisplaySearch LLC, an Austin, Texas, tracker of TVs and monitors.
“They hit very attractive price points that have been very difficult for other manufacturers to achieve because of overhead,” Gagnon said. “Consumers are continually looking for the best price.”
Vizio keeps costs low but still manages to sell quality TVs, Gagnon said.
“You go into the store and look at their product, the design is pretty good,” he said. “They’re using top-grade panels.”
Vizio still has to deal with perceptions about cheaper TVs. The company offers a quality guarantee, even offering to pay for in-home service for up to a year, Schindler said. It seeks feedback from several thousand customers each week, he said.
The company is coming off a strong December for flat-panel sales, which some dubbed “hi-def Christmas.”
Vizio said it sees the trend continuing this year.
“Seasonally you’d typically have a great holiday season and then drop off in Q1,” Schindler said. “Our Q1 numbers will be larger than Q4, and Q2 is already is looking stronger than Q1.”
This week, Vizio plans to come out with a 60-inch plasma TV for $2,999, about 40% below its nearest competitors.
Last year, Vizio ranked as the No. 7 seller of flat TVs, up from No. 15 in 2005, according to DisplaySearch’s Gagnon.
“They’re still not top 5, but their growth has been strong and they’re certainly capitalizing on a growth market,” he said. “Their distribution channel up until recently has been limited to warehouse clubs. Expanding beyond that is going to be key in their growth.”
It’s a criticism Schindler accepts. The company is looking to big electronics retailers as well. One model already sells in Circuit City stores,a 50-inch plasma selling for $1,699. Schindler said he hopes to finalize a deal with another major retailer this spring.
