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American TV maker Vizio rides low-cost strategy

It has passed Sony, Samsung as the top seller of flat panels.

Associated Press
Published September 8, 2007


LOS ANGELES - Upstart American TV maker Vizio Inc. has been nipping for three years at the heels of household names such as Sony and Samsung.

Quietly selling its affordable line of flat-panel sets in wholesale club stores instead of electronics retailers, it knocked its foreign competitors from the top spot in the second quarter to become the largest seller of flat-panel TVs in North America.

It is too early to say the company will bring an American brand back to the top ranks of TV makers for good. But Vizio, based in Irvine, Calif., is poised to benefit from a variety of trends, including the rising popularity of flat-panel sets and the need for all Americans to upgrade to a digital TV by the federal government's February 2009 deadline.

Aided by a few one-time boosts in retailer inventories, Vizio grabbed 12 percent of the flat-panel market in the second quarter. That was more than four times its share in the year-ago quarter.

The cornerstone of Vizio's strategy has been selling at warehouse club stores such as Sam's Club and Costco, which can pass volume discounts along to customers.

By avoiding retailers that add as much as 30 percent to the price of a TV, Vizio has escaped the retail-channel conflicts that can shackle larger brands, said Ross Young, president of market researcher DisplaySearch.

If a major brand sells a flat-panel TV through Best Buy for $1,999, for instance, and then sells the same set at Costco, it can't pass along a lower margin to consumers without angering Best Buy, Young said.

[Last modified September 7, 2007, 23:51:47]

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