January 2, 2007 4:00 AM PST

The other guys in digital TV

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Westinghouse's digital entertainment group employed 15 people when it started in 2002. The company that makes Polaroid TVs doesn't have much to do with the rest of the company: it licenses the brand.

Costa Mesa, California-based Vizio was actually a consulting firm. One of its first engagements was helping Gateway put together its 42-inch plasma TV system, priced at a then-startling $2,999. Comparable systems at the time sold for upwards of $6,000.

"They sold over 4,000 in the first month. It was pretty exciting," Wang said.

The company's current strategy revolves around three points. First, Vizio tries to have the cheapest TVs in the mid- to high-price bands. In late 2006, for instance, the company announced it would release a sub-$2,000 47-inch LCD TV with 1080p resolution. The vast majority of TVs in this class sell for $2,500 and above.

"When the larger-sized TVs become cost-effective, they are the first out with a great price," said Ross Young, president of DisplaySearch.

Keeping it lean
Costs are kept low due to the company's structure. Vizio employs only about 55 people in the U.S. and most of them work the customer support desk, according to Wang. There are a few additional employees overseas. "We like to keep it really lean," Wang said.

Second, Vizio sold TVs through Costco and Sam's Club, although it now sells some models in Circuit City. These retailers, which are selling an increasing number of TVs, typically are looking for gross margins on their products only in the 10 percent range, said Young. Electronics retailers are looking for 25 percent or more. For Vizio, that's a two-way benefit: the price of its TVs are comparatively lower than those from major manufacturers at electronics stores and major manufacturers can't participate as fully as they'd like to at places like Costco.

"Best Buy probably wouldn't carry you if you were going to sell a TV for $1,499 at Costco and sell the same one there (Best Buy) for $2,499," Young said. "They (Vizio) don't have any channel conflicts."

Wang also adds that the company has put an emphasis on quality and customer support in an effort to build a brand. The company offers free in-home support during the warranty period for consumers who bought a TV measuring 30 inches or more across. It also has a "no bright pixel" guarantee for these TVs for the life of the product. White pixels are faulty pixels that become a pinpoint of light on a TV's display.

The TVs come with things such as full-color, life-size shots of the remote as well as poster-sized quick-start guides. After it started including the quick-start posters, support calls declined by around 60 percent. Retailers have asked other manufacturers to come out with a similar guide, according to Vizio.

Syntax, which started in 2003, can be seen as a conglomerate of convenience. One of its early plastic suppliers was actually a toy car manufacturer, said Sollitto. Another partner came from the refrigeration arena. There were also a few tier two and three video processor companies.

"There were all of these smaller Asian companies that wanted to participate in the market but they were too small on their own to stand toe-to-toe with the Japanese," he said. In 2005, Syntax merged with the publicly traded Brillian, which landed, then lost a deal to produce TVs for Sears. The merger gave the combined company access to public market.

Subsequently, it entered an alliance of convenience with South Korea's LG. LG supplies panels to Syntax, but the two will also collaborate on R&D in China, where Syntax already has a plant.

So far, the company has mostly sold its TVs online through Amazon.com and Target.com. It only recently signed deal with Circuit City.

"Our market share has happened in less than 40 percent of the market outlets," he said.

The big boys
The companies that migrated from PC land, meanwhile, each have made mistakes, noted IDC's O'Donnell.

Dell's direct model has crimped sales because consumers generally want to touch and see their TVs in person before buying them, O'Donnell and others have observed. The Round Rock, Texas-based company has put up kiosks in malls to ameliorate that effect somewhat. If things don't improve over time, O'Donnell speculated that Dell could retrench a bit in TVs.

Dell spokesman Mike Maher said that Dell will remain in the TV business, and added that consumers over time will become accustomed to buying TVs online. Critics in decades earlier, Maher noted, said consumers wouldn't buy servers or notebooks online either.

By contrast, HP thought its name entitled it to a seat in the premier manufacturer's club. "HP came out originally at ridiculous price points. They were up there with Pioneer and the other established guys," he said.

Over time, that has begun to change. HP has become more aggressive when it comes to pricing. It has also figured out ways to bundle its PC know-how. HP recently came out with a TV with a built-in media adapter, which lets consumers hook the TV directly up to a computer. HP has also revamped its marketing pitches in the last two years under peripatetic executive Satjiv Chahil.

Another PC power with an uneven history in selling PCs is ViewSonic. "They are doing OK, but not as well as expectations," O'Donnell said.

In the meantime, Westinghouse, Vizio and the other new manufacturers will be coming up with ways to cut prices.

"Unlike many brand-name consumer companies, our mission is to make sure that TV prices drop fast," said Wang.

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DisplaySearch, Vizio, Polaroid, Westinghouse, digital television

14 comments

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Syntax (Olevia) is a good brand
I got a 27" LCD on Black Friday, 2005 for $600 at Frys. Still performs solid, no complaints.

I read where they found assembly in SoCal was cheaper, so they are moving their USA assembly there.
Posted by okvol (5 comments )
Reply Link Flag
Polaroids
My dad got a Polaroid 32" LCD on sale for $599 from Circuit City! I think that is a pretty darn good deal at this moment in time. The TV itself has a myriad of hookup options on the back. Not the greatest picture but for the price what would you expect. It still looks pretty darn good though!
Posted by reddog00 (2 comments )
Reply Link Flag
What to do with old TV?
Despite miracle chemistry making indestructible printed circuit boards resistant to all types of corrosion, wouldn't it be perfectly sufficient to sell a black box big enough to convert this all to VHF/UHF PAL/NTSC RGB/VIDEO/divx outputs and be with a biodegradable licence.
Posted by Martin Ozolin (13 comments )
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Westinghouse found the clue
Baught a 32in Westinghouse LCD from BestBuy for Christmas - because of the name and because it was the "best buy" (snicker snicker). After reading this , I am pleasantly surprised to see that is made in Mexico - which is a whole lot more acceptable than God forsaken China. Quality and features comparable to the rest. Go Westinghouse.
Posted by gggg sssss (2285 comments )
Reply Link Flag
Westinghouse 42" 1080p
I bought a 42" 1080p Westinghouse LCD back in July from Best Buy too for only 1500 compared to tv's almost twice the price. Westinghouse quality is great so far. Think it's better than most on show floor and best price. Happy the little guys are getting bigger. It's good for the industry no matter what sony says.
Posted by jackasssiegel (5 comments )
Link Flag
Westinghouse found the clue: Mexico
hey... greetings from Mexico!. As a mexican, I feel honored by your comment. I feel that things are made with quality in mind, here in my country.

If I knew Westinghouse was putting together their TVs here I would have bought one of them. Instead I bought a 32" LCD Polaroid. It's good, but I think I will be buying a 42" very soon.
Posted by worx3d (1 comment )
Link Flag
word of warning
<a class="jive-link-external" href="http://www.avsforum.com/avs-vb/showthread.php?t=689997" target="_newWindow">http://www.avsforum.com/avs-vb/showthread.php?t=689997</a>

236 pages of threads on a forum, of which many users are complaining about problems with Westinghouse's customer service and RMA.

Personally I've been dealing with Westinghouse since August of 2006 and they have yet to fix the issues with my TV. It's now April of 2007 and I just received the replacement TV this past Thursday. Turns out they damaged it before they shipped it out and I have to send it in again (and likely wait 6 weeks longer). They have the lowest rank on the BBB as well, so I doubt my complaint there will be of any good.

My thoughts are that if you are one of the lucky few to have a fully functioning Westinghouse TV, then you have a fantastic product. With excellent specs and a very crisp, colorful 1080p picture it's a great TV. Unfortunately, if even the slightest thing is wrong with it, expect at least half a year of dealing with customer service to get a replacement.
Posted by GlowingApple (1 comment )
Link Flag
The other guys
I very good run down. I was pleased that it was balanced and fair.

If there are no major PR or quality problems, these other guys are going to give the big guys a run for their money.

Selling solid performance and a great price without the hyped promises is a proven business model.

One only has to look what Hyundai did in the car market to see what is now working in electronics.
Posted by karport (132 comments )
Reply Link Flag
westinghouse
Definitely the way to go. I got the 42" LCD for my office computer. Excellent picture quality. Thumbs up for Westinghouse.


Ash Gilpin
<a class="jive-link-external" href="http://www.ashgilpin.com/archives/64" target="_newWindow">http://www.ashgilpin.com/archives/64</a>
Posted by ashgilpincom (30 comments )
Reply Link Flag
You get what you pay for IMHO
I wonder if in a few years the owners of these TV's will still be happy with them.
Posted by Ryo Hazuki (378 comments )
Reply Link Flag
You get what you pay for IMHO
I wonder if in a few years the owners of these TV's will still be happy with them.
Posted by Ryo Hazuki (378 comments )
Reply Link Flag
Congratulations! So you've finally gotten a bigger apartment and can finally afford a nice TV set for your football games and romantic stay-at-home movie dates. Before you write a cheque or swipe your shiny credit card for a nice big TV, you should first check the following list and make sure that you do understand the difference between getting a plasma or LCD TV.
Posted by johnbovi12 (3 comments )
Reply Link Flag
 

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