Consumer electronics maker Vizio is betting heavily on technology's cutting-edge future, but the company is also hoping that history repeats itself.

The closely held Irvine, Calif.-based company is looking to duplicate the rapid expansion it experienced in its first life cycle, when it grew from its founding in 2002 to become the No. 1 U.S. seller of liquid crystal display TVs today. This time, Vizio is jumping into the smartphone and tablet computer markets, which are dominated by some of the same companies it overtook in the TV sector.

This week, Vizio unveiled its touch-screen smartphone and its tablet computer at the Consumer Electronics Show in Las Vegas and said both products, which will run Google's (GOOG) Android operating system, would go on sale this summer.

The Vizio Phone has a 4-inch touch-screen -- slightly larger than the 3.5-inch screen on Apple's (AAPL) iPhone -- and includes features such as two built-in cameras and an HDMI output that allows videos taken from the smartphone to be played on Vizio's flat-screen TVs.

The Vizio Tablet has an 8-inch high-resolution screen -- smaller than the 9.7-inch screen on Apple's iPad or the 8.9-inch screen on Hewlett-Packard's (HPQ) Slate -- and has a 1 gigahertz processor just like the iPad. (The HP has a 1.6 gigahertz chip). Both products will be able to function as remote controls for Vizio TVs.

Smartphone Shipments Are Leaping


By jumping into smartphones and tablets, Vizio appears to be pulling some of its focus from an LCD market where growth is tapering off into two sectors primed for continued expansion. Global LCD TV unit-sales growth is expected to slow to 12% this year, down from 31% in 2010, while price declines will result in the first-ever year-over-year decrease in worldwide LCD TV revenue, DisplaySearch said earlier this week. Vizio didn't respond to DailyFinance requests this week for comments about the new products.

However, worldwide shipments of touch-screen smartphones will jump almost eightfold to 355 million units between 2009 and 2015, research firm Strategy Analytics said last month. Global shipments of mini-notebooks, tablet and touch-screen computers will surge sixfold to about 122 million units in 2016 from about 20 million units in 2010, DisplaySearch said in October.

But while both markets are growing quickly, Vizio may have a harder time duplicating its TV success in smartphones, according to Allen Nogee, principal analyst at research firm In-Stat.

How Vizio Won in TVs

"I think Vizio is a fine company, and probably even will make great smartphones, but I think their TV success will do them little good in the phone area," says Nogee.

That's because Vizio, which took just six years to become the largest flat-screen TV seller in North America, gained market share by building TVs cheaper than Sony (SNE) or Samsung, capitalizing on Taiwan-born founder William Wang's experience as an engineer and his relationships with overseas manufacturers. That allowed Vizio to undercut other TV-makers on price and sell to big-box retailers such as Walmart (WMT), Best Buy (BBY) and Costco (COST). That turned HDTVs from a luxury item to a mass-market purchase.

As a result, Vizio's annual revenue more than tripled between 2006 and 2009 to about $2.5 billion, which still made the company a fraction of the size of Samsung and Sony. Most recently, Vizio sold 1.6 million LCD TVs in the U.S. during the third quarter of 2010, giving it a 20% market share, iSuppli said in November.

But while Vizio hasn't disclosed prices for its new smartphone and tablet, attempts to undercut on price in the smartphone arena may do little for sales, especially in the U.S., where many smartphones are essentially given away or priced below cost by telecom giants such as AT&T (T) and Verizon Communications (VZ) as loss-leaders to lure mobile subscribers.

Moving Upscale Quickly

Vizio won't have that problem in the computer market, where its tablet is likely to be price-competitive with HP's Slate ($799), Dell's (DELL) Streak ($549) and Apple's iPad ($500 to $800, depending on features). In fact, the pricing structure of tablet computer components may play right into Vizio's hands.

"The average selling price for 5-inch to 10.2-inch touch-screens used in mini-note and slate PC applications is falling rapidly, as more suppliers enter the market and manufacturing yields increase," DisplaySearch said in its October report.

Additionally, Vizio has shown the ability to move upscale with its products after its larger rivals bring their prices down to compete with it. Vizio, whose LCD market share in the U.S. has grown by about a third in the past year, fueled much of its recent growth by boosting sales of higher-end TVs with light-emitting diode backlighting, Internet access, custom applications and other top-end features.

"Vizio can no longer be called a value-LCD TV brand and now is a direct competitor with premium sellers, including Samsung," says Riddhi Patel, iSuppi principal analyst for TV systems. All of this will make Vizio's attempt to evolve away from its flat-screen roots a drama well worth watching.

"Sometimes a well-known brand can hurt you if people don't feel the company can excel in new areas," says Nogee. "Vizio could do well in PCs and tablets, but phones is a new world. They still might do well in emerging markets if they can add value."


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pauvycon

VIZIO TVS ARE JUNK. HAD ONE FOR 14 MONTHS AND IT WENT BELLY UP. TWO MONTHS AFTER THE WARRANTY RAN OUT, AND THE COMPANY SAID SORRY YOU'RE ON YOUR OWN. I PAID $ 1300.00 FOR A FORTY TWO INCH AND NOW ITS JUNK. LOTS OF PEOPLE HAD THE SAME PROBLEM. NOW WHY DO WE BUY IMPORTED PRODUCTS ?????

January 10 2011 at 4:42 PM Report abuse rate up rate down Reply
kadame39

We still have 3 tube TV's and they still work fine. Buy a flat screen? Why?

January 10 2011 at 12:08 AM Report abuse -1 rate up rate down Reply
1 reply to kadame39's comment
jpclarksville

LOL exactly, use them until they die.

January 10 2011 at 1:57 AM Report abuse -1 rate up rate down Reply
likes2kayak

My Mom just purchased a vizio tv and I don't think I care for it. The sound just doesnt' seem to be quality. And the picture isn't as good as the sony we have.

January 09 2011 at 10:32 PM Report abuse -1 rate up rate down Reply