10. Lawton, U.S. Upstart Tales on TV Giants in Price War, 2008 (Price Strategy)

10. Lawton, U.S. Upstart Tales on TV Giants in Price War, 2008 (Price Strategy)

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U.S. Upstart Takes On TV Giants in Price War By CHRISTOPHER LAWTON in San Francisco, YUKARI IWATANI KANE in Tokyo and JASON DEAN in Beijing April 15, 2008 Static in the global TV-set business is forcing some big players to re-tune their game. On Monday, Philips Electronics NV blamed a profit dip on its floundering TV operations -- just days after saying it would restructure its North American television business. Earlier this month, Sony Corp. replaced its top TV executive following failed efforts to turn around its unprofitable television unit. Matsushita Electric Industrial Co., the maker of Panasonic products, recently reorganized a part of its U.S. business to better respond to intensifying price competition. But one upstart, Irvine, Calif.-based Vizio Inc., has largely surfed past the industry's woes. Its single focus: churning out low-priced flat-panel TVs. Vizio is a fraction the size of Sony and Samsung Electronics Co., both leading brands in the U.S. flat-panel market. Yet Vizio shipped 12.4% of North America's liquid-crystal display, or LCD, TVs in the last quarter of 2007. That's just behind Sony's 12.5% share and Samsung's 14.2%, according to research firm iSuppli Corp. Overall, Vizio's sales have multiplied to just under $2 billion last year, up from $700 million in 2006 and $142 million in 2005, according to the closely held company. The California company's success illustrates the rise of a new business model in the fast-changing TV industry. Big Korean and Japanese consumer-electronics makers spent huge sums developing and marketing their own technology, creating a high barrier to entry for newcomers. They also built many key components in-house, including the all-important LCD and plasma display panels. But panel technology is becoming ever more commoditized, meaning big brands aren't the only ones controlling the field. The shift has allowed nimble players like Vizio, which handles the design and marketing, to hook up with contract manufacturers and produce their own cheap TVs. At the same time, discount retailers such as Wal-Mart Stores Inc. are increasing their sales in the electronics category, slashing prices in the process. By late last year -- after a spate of holiday promotions -- the average flat-panel TV cost just $920, down 24% from 2006, according to DisplaySearch. Vizio chief executive William Wang was prescient. A native of Taiwan and a former marketer of computer monitors, he was struck by a 2002 ad for a $10,000 Philips flat- panel TV. He sensed an opportunity. Rather than sell the sleek sets as luxury items, he figured he could make flat-panel TVs that were affordable to average consumers. Back then, the computer-monitor business had largely transitioned from clunky cathode-
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This note was uploaded on 11/02/2011 for the course MARK 11420 taught by Professor Cox during the Fall '11 term at University of Houston.

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10. Lawton, U.S. Upstart Tales on TV Giants in Price War, 2008 (Price Strategy)

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