Vizio Proves Cheap HDTV Sells

Some are hailing it as a sign of good-news in this foul economy! Vizio, maker of the sort of cheap HDTVs you’d find at Wal-Mart, is actually growing and breaking sales records. But the real success behind Vizio might be a variation of an old adage - if you build it cheap, they will come. Is Vizio a silver lining in the troubled economy or just another symptom of the downturn?

Vizio is turning into a powerhouse in the HD market. Unlike most businesses Vizio has experienced growth for the last two consecutive quarters. The company has recently put out a press release that boasts it is the second largest shipper of HDTVs in the US. Its sell-through increased 52% for the Holiday season from 2007 to 2008.

While it appears to buck the global economic trend - it’s also a troubling sign when a third tier vendor like Vizio tops the charts. It’s hard to say if it’s really bucking the recession (as cited by our friends over at EngadgetHD) or if this is merely another symptom.

Like Pioneer Kuro, Vizio has recently made the decision to exit the plasma panel market. It’s further evidence of doom for plasma as a display technology. But whether you’re Pioneer or Vizio, the decision to jump from Plasma is more about streamlining a business model than an indictment on a technology that is shrinking in popular favor.

The Trouble with Third-Tier Electronics

Before you get the idea that we're complete electronics snobs, let’s get one thing straight. There is nothing wrong with saving money on electronics. Audioholics.com has made its mark taking down some of the bold claims of many esoteric brands while happily recommending mainstream equipment for any purpose when it’s proven it’ll do the job.

When it comes to HDTV there are a variety of reasons you might want to go with the very cheapest you can find. Let’s face it, a lot of Vizio HDTVs are being snapped up by people who never thought they’d be able to afford one. But today, you might want to walk out of Wal-Mart and do some comparison shopping before you’re shocked into buying an $800 no-brand HDTV. The price differential between Vizio and familiar brands like Panasonic is wilting away like last week’s Valentine’s Day flowers.

Buyer Beware

When buying brands like Vizio and other retail house brands like Insignia, it’s good to know what you’re really getting into. These are known as third-tier brands. It basically means they’re companies that have almost nothing to do with manufacturing, quality control, warranty or any investment in their own brand name.

Tiers for Fears

Tier one are the familiar names you’ve all heard of. These include Sony, Toshiba, Sharp, Samsung, Panasonic and many more. All are great brands! There might be a little variation in quality between product lines from any of these companies, but all-in-all these brands have spent decades building a name. They’re generally involved in the design, engineering and marketing of their own products.

Tier two are brands that might have been. Usually they were once tier one but were acquired by a competitor - Zenith is now owned by LG, Magnavox by Philips. The company that owns them keeps them around to be a competitive line to specifically occupy a lower price point.

Tier Three are simply ventures. Many of them are from China or might be North American with ties to Chinese labor. A company can appear out of nowhere and buy up parts, auction off assembly contracts to the lowest bidder and voila – instant competitor to the big guys.

Few third tier ventures in electronics reach the heights of Vizio. But that doesn’t make Vizio much different than Apex, TruTech or the many no-name brands making those cheap monitors you see at generic computer stores.

These companies can appear, make a killing and then fade away at the first sign of a downturn. Since they have very little to do with manufacturing the build quality will be very inconsistent. Sure, you might take a home a gem with the Vizio name on it and have it last for years. But more than likely you’ll end up with problems soon after the initial warranty expires.

Buyer Beware

The numbers boasted by Vizio recently might be a good sign for this particular company. But we’d hesitate to start cheering the praises of the company itself. The only trend Vizio (and companies like it) are bucking is the ability to modify one very human trait.

It’s human nature to be attracted to the familiar. People and even whole families tend to form camps around a specific auto-manufacturer. They also say there is no place like home. People love what they know!

So, why would so many people take a chance on an unfamiliar knock-off brand of HDTV? I’d say Vizio’s success is less a sign of a strong corporation and more a sign of a company that’s deftly working a loophole. Sadly, it can also be read as a sign of desperation in many of its customers.