Irvine-based Vizio Inc. is targeting China for a line of smart phones.
The company gave a sneak peek of the Android-powered smart phones to members of the media, potential new distributors, and customers during the 2013 International Consumer Electronics Show last week in Las Vegas.
Vizio said the phones are in the final stages of development and expected to be on the market in several months.
China accounts for about a third of smart phone sales globally and is the leading growth market. Sales more than doubled to 189 million units in 2012, according to Taiwan-based industry tracker DigiTimes Research.
China-based companies account for most of the sales, with prices that typically range from $70 to $120.
Privately held Vizio has made a specialty of carving out big chunks of market share by developing products—flat TVs, most notably—at lower price points than market leaders. Its TV sales grew rapidly since the company started in 2002, accounting for the bulk of its estimated $3 billion in annual sales. The company has made similar gains in smaller segments such as sound bars and other TV accessories.
Less Success
Vizio has seen less success for a line of PCs, ultrabooks and notebooks introduced last year at prices above entry level. And a plan to make and market LED light bulbs appears to have gained no traction.
Vizio’s bid for the smart-phone market in China will encounter a new challenge with the expansive field of competitors who already make relatively low-priced smart phones, a landscape that has led Cupertino-based Apple Inc. to begin work on a cheaper model.
Another difference: Vizio also can’t rely on a strong U.S. network of retailers that grew with its TV sales, a roster that includes Walmart, Sam’s Club and Costco, among others.
Market Share
Apple’s move comes with a renewed focus on China, where it recently slipped from fourth to sixth on the list of biggest smartphone sellers in China, with a market share of less than 10% as of the third quarter, according to recent estimates.
Samsung Group of South Korea is the market leader, with about 15%, followed by Lenovo Group Ltd., China Wireless Technologies Ltd.’s Coolpad unit, ZTE Corp. and Huawei Technologies Co.—all based in China.
Vizio’s entries for the China market are expected to include one with a 5-inch HD display, 32 gigabits of memory and an 8-megapixel rear camera. The other phone has a smaller 4.7-inch display and similar camera functions.
Production
Vizio designs its products in Irvine and for years has relied on Taiwanese contract electronics maker and investor AmTran Technology Co. and others there for production. It said it has already secured deals for production in China, but company officials wouldn’t elaborate on those plans or prices for its smart phones.
It could get a hand in keeping prices low by seeking a deal for service contracts with China Telecom and/or China Mobile, which combine for some 850 million mobile subscribers in the country.
Possible Benefit
One possible benefit: It’s relatively easier to strike deals for service contracts with China-based telecoms compared with the U.S., according to Vizio Senior Product Manager Brad Johnson.
“Entering the U.S. market is very difficult because of the carrier restrictions,” Johnson said during a demonstration of the smart phone at a posh ballroom at the Wynn Hotel & Casino during CES. “It’s a long process to enter that market.”
Johnson said that Vizio hasn’t ruled out a run at the smart-phone market in the U.S., but the company is focusing solely on China for now.
