If David had a 1-0 record versus Goliath, are the odds still against David in the next fight? Private TV maker VIZIO, once a David in the TV industry, hopes to repeat its win versus the goliaths of personal computers and tablets. Should these industry giants be scared?
The last fights
VIZIO started as a consulting company in 2002 to help Gateway, the once cow-branded computer retailer, create TVs for its stores. Once Gateway abandoned its stores, VIZIO founder and CEO William Wang decided to make TVs himself, focusing on affordable pricing. VIZIO began churning out TVs in 2003 and retailing them through Costco
LCD TV Market Share
Flat Panel TV Market Share
Source: HIS iSuppli February 2011.
VIZIO does have yet to prove itself in markets outside TVs. VIZIO's first tablet, released mid-2011, seems to have suffered from poor timing, competing against Amazon's $200 Kindle Fire. VIZIO's tablet was originally priced around $300 but sold for less than $200 at Costco and Wal-Mart just months after release in November, according to online deal forums. VIZIO also showcased a smartphone early last year but has yet to follow with any news of a release date.
The next bout
VIZIO now looks to gain another foothold in personal computing. At this year's Consumer Electronics Show, VIZIO is revealing a pair of all-in-one PCs, three notebooks, and a larger tablet. VIZIO mirrors the design from Apple
VIZIO hopes that the fresh designs will "live with our lifestyle in our living rooms," and that the computers and tablet will be a complement to VIZIO TVs in delivering entertainment to consumers in what it calls the "VIZIO Entertainment EcoSystem." This sounds very similar to a Steve Jobs' quote in Walter Isaacson's biography: "'I'd like to create an integrated television set that is completely easy to use,' he told me. 'It would be seamlessly synced with all of your devices and with iCloud.'"
With rumors that Apple's readying a slingshot to fight against VIZIO's TV sets, and VIZIO throwing a stone at Apple's PC and tablet business, the battle between these two companies will be a tag-team of Davids and Goliaths on both sides. VIZIO's traditionally low price position can hurt Apple where it's most vulnerable, but VIZIO must contend with Apple's superior brand, ease of integration between products, strong body of developers, marketing savvy, and on and on. This might be an uphill fight for Vizio.
Of course, many other competitors must worry about VIZIO's moves if it is able to disrupt and succeed in the PC business as well as it has in the TV business -- for example, Hewlett-Packard
Unfortunately, VIZIO is privately held, so investors must look elsewhere to make bets on its business. One move is banking on Costco, VIZIO's first retail partner and the place where VIZIO still gets a majority of its business. Costco even helped VIZIO develop packaging to help appeal to customers. According to its latest annual report, Costco made 18% of revenue from "hardline" items, which includes electronics. Another move is avoiding VIZIOs soon-to-be competitors in the PC industry.
Or if you are thinking of investing in the smartphone and tablet markets where VIZIO has yet to prove itself, read about these three companies that are quietly cashing in on the booming mobile industry in this free report.