Irvine-based Vizio Inc. will draw from the same playbook that made it the top-selling flat-TV company in North America as it begins sales of desktop and laptop computers.
The company has deals lined up with Walmart, Sams Club, Costco and Amazon.com as it enters another crowded field of established competitors. This time it will face off against Palo Alto-based Hewlett-Packard Co., Dell Inc. in Round Rock, Texas, and Beijing-based Lenovo Group Ltd., among others. It’s a segment that’s seen sluggish sales and narrowing profit margins amid heavy competition from tablets and smart phones in recent years.
Vizio is ranked No. 5 on this week’s list of private companies based in Orange County (see list, page 16; related stories throughout issue) with an estimated $3 billion in sales in 2011.
Its rapid rise among flat-TV marketers has given the Vizio brand strong name recognition and solid relationships with retailers.
Both will be put to the test as its tries to lure personal computer buyers.
Familiar Path
Vizio said it will follow a familiar path on marketing with a mix of TV, print and digital media, celebrity endorsements and big event sponsorships—tactics it has used for TVs.
It’s also taking new routes on retail, including a partnership with Microsoft stores to display and sell its products. Road shows to get computers into the hands of would-be customers also are in the works, according to Chief Technology Officer Matt McRae.
“To augment the general awareness campaign, Vizio is also building a mobile experience center and advanced merchandising concepts in collaboration with our retail partners to enable these premium ‘hands-on experiences,’ ” he said.
Vizio used a similar campaign in October to boost awareness for its 3D TVs, throwing a celebrity-attended event hosted by Los Angeles Clippers star and Vizio pitchman Blake Griffin at an upscale sports bar in Santa Monica, which was outfitted with more than 30 3D TVs powered by Vizio tablets.
The company had an OC event scheduled last weekend in the parking lot of South Coast Plaza, with former University of Southern California and current Green Bay Packers linebacker Clay Matthews expected.
Vizio first introduced its line of desktops and thin and light laptops at the International Consumer Electronics Show in January. It held an event this month in New York for the media and analysts as it kicked off retail sales.
Vizio picked up plenty of kudos during launch week, with reviews calling it “sleek” and “well designed.” Now it’s largely a matter of getting the products to its network of retailers.
“That’s going to be their advantage,” said Craig Stice, senior principal analyst for computer platforms at Englewood, Colo.-based market tracker IHS Inc. “When you go into Walmart and Target you may not see similar systems from HP or Dell.”
Vizio enters the fray amid an industry push to produce thinner and lighter PCs and notebooks, commonly referred to as ultrabooks. It’s also just ahead of the upcoming launch of Windows 8, a new operating system from Microsoft, which could help boost sales as customers consider upgrades.
Lower prices have been a hallmark of Vizio’s success at claiming market share with TVs, but that advantage has narrowed on PCs. Its laptops have a starting price of about $900. They will compete with Apple Inc.’s MacBook Pro and Air models, which start at about $1,000, as well as entries from HP, Lenovo and other brands.
Vizio also faces competition from tablets and smart phones, both of which have seen sales zoom as PCs have slowed down.
“With new tablets and smartphones, it’s been challenging to convince the consumer to go out and buy a new PC,” Stice said. “It may take some time to prove themselves as a worthy candidate, but I am conservatively optimistic they can do it.”
The move into PCs has long been on the mind of Vizio founder and Chief Executive William Wang, who told the Business Journal last year he intended to transform his flat-TV business into a diversified consumer electronics company.
TVs remain its mainstay for now.
It regained its U.S. market share lead in the LCD TV segment in the first quarter of 2012, surpassing South Korea-based Samsung Group, which had held the title since the second quarter of last year. It also finished the period as the top seller of sound bars in the U.S., a position achieved shortly after it moved into accessories and has held for the past year or so.
The recent highlights don’t erase the trend of a maturing market, with sales of flat screens expected to decline 5% to 37.1 million units in the U.S. this year, according IHS.
That would mark the first drop since flat TVs debuted more than a decade ago.
Vizio’s move to personal computers comes as tablets and smart phones claim a greater share of shoppers’ budgets. The company now is banking on another transition—to cloud-based, digital content and smart TVs—to drive innovation and new opportunities in the TV market over the next five years, according to McRae.
“The move into additional product categories outside of the TV, such as computers, is driven by our belief that consumers expect to access their personal and premium content from any screen,” he said.
Tablets
The jury is still out on last year’s entry into the tablet market with an 8-inch model to compete against Apple’s iPad and other brands. The Vizio Tablet was priced below the iPad at $300 but debuted at a time when other major brands slashed prices on their models.
Vizio sold out it tablets last year, although its totals were too small to register in market-share research, according to industry trackers.
The company now is designing a new model, McRae said.
Vizio also sought to get a foothold in the LED lighting market last year as the industry looked to capitalize on businesses and consumers replacing incandescent bulbs with the more energy-efficient versions.
It now appears the company has pulled the plug on those efforts.
“Vizio is not selling LED light bulbs and has no plans to announce,” McRae said.
