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Vizio Big Screen TV's Make For Big Business

Vizio VM60P - 60" Plasma HDTV
Source: vizio.com
Vizio VM60P - 60" Plasma HDTV

As we head into the crux of the holiday shopping season, big screen, flat-panel digital televisions will once again be a hot seller; and the hottest company in this sector isn't Samsung, or Panasonic, or Sony or Pioneer. Prepare yourself for the Vizio invasion.

This is one of the most extraordinary stories I've seen in some time. Vizio comes from nowhere just a few years ago, the brainchild of William Wang who got his start by selling Gateway's Ted Waitt on the idea of higher margin consumer electronics, like the budding flat-panel TVs that were coming on the scene in 2002, to help turn Gateway around. Waitt eventually ditched the TV business, but Wang was smitten with the possibilities. So he decided to strike out on his own.

Since then, Vizio has been off to the races. Partnering with big box retailers like Costcoand Walmart , Wang is doing for flat-panel TVs what Fred Franzia and "Two-Buck Chuck" have done for the wine business: good quality, great prices, and transforming what had been a high-end luxury item into a commodity everyone can enjoy.

How successful has Wang been? I spent some time talking with him yesterday and he tells me Vizio did a staggering $700 million in revenue last year. But that number should swell to over $2 billion this year! And maybe the most remarkable part of this story: Wang tells me 99% of the company's sales come from the United States. This rocket ship ride is almost completely domestic, and Wang makes no bones about the fact that there is enormous opportunity for his company when he decides to start selling his sets internationally.

The company's been so successful that it even overtook Samsung as the top-selling flat-panel TV in the United States during the second quarter; its sets, on average sell for half what his competitors charge. But Samsung regained the lead last quarter. Wang tells me he's just happy to be in the Top 3, let alone jockeying for the top spot. Floored and humbled by the success, he says, as he considers plans to go public.

Wang's business model is unique: extremely low overhead for one. He's based in Irvine, California and only has 90 full time workers in this country. His manufacturing is in Asia, as well as Mexico. The company keeps inventories extremely low, buying only the components it needs exactly when it needs them so as not to fall victim to fast-falling technology prices.

"Vizio changed the nature of the economics of the television business dramatically," Gartner analyst Van Baker tells us. "It is price, along with quality, the product is actually a very good product."

Wang tells me the company is beginning to shift its 1% overhead/1% marketing strategy. Signing San Diego Chargers star running back LaDainian Tomlinson as the company's pitchman is a start down that road of turning Vizio into the brand you end up with instead of the brand you're looking for. In fact, Wang claims 40% brand awareness (Sony teeters near 100%), and he says his goal is to become one of the world's top consumer electronics brands.

A few years ago, in the rough and tumble, ultra-competitive world of flat-panel televisions, that idea would have been laughable. Today, Wang is laughing all the way to the bank.

Questions? Comments? TechCheck@cnbc.com

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