While filling up on my five-hours-per-day tube habit, I spotted a commercial that utterly shocked me. This ad wasn’t particularly gory or raunchy — it was the advertiser that caught me off-guard. Vizio, one of those off-brand flat screen TV-makers whose native habitat is in the aisles of Sam’s Club and Costco, was actually advertising on TV.
From everything I’ve seen, the picture quality on a Vizio, while maybe not as sharp as a Panasonic, is good enough that the average person wouldn’t be able to tell the difference. And its prices are certainly cut-rate — something consumers have apparently responded to, as the upstart company is now one of the top ten TV sellers in North America. Not bad for a company that didn’t exist five years ago.
So are LG and Sharp freaking out? Do companies like Vizio, Maxent, and Sceptre have the big guys running scared? Hardly. In fact, these upstarts could turn into the best thing to happen to the mega-manufacturers since cable.
It takes an enormous amount of manufacturing prowess to pump out all the parts in a TV. In fact, only a handful of companies have anything close to the resources and expertise needed to make crucial components like plasma panels. As a result, most TV companies — especially smaller ones—outsource much of their manufacturing and part production to the guys with the megaplants.
For obvious reasons (no one likes to be told there’s little separating them from another company), both the big and small guys are loathe to reveal details about who makes parts for whom, however, a Vizio rep told me that “five different companies” make its panels, including ones I’ve heard of. Considering you can count the major panel makers on one hand, their sources should be pretty obvious to anybody with Google.
Of course, the difference in quality between a Sony and a Sceptre has been fading for years. And if current trends hold, the only difference between the big names and the no-names will be the names themselves. Still, the resulting cannibalization of their business could very well turn into a good thing for the giants.
The TV business, like every other sector of the consumer electronics industry, is tough. Staying competitive requires enormous manpower and financial resources. Marketing, advertising, legal departments, and public relations don’t pay for themselves. By opening up their factory doors to smaller companies, the big guys have a significant opportunity to basically transform their primary TV-related revenue stream from selling sets to consumers to selling parts to other companies — a revenue stream that is likely to be far less fickle and require far fewer resources wasted on front office paychecks.
So who come out the winners? The guys with the plants, of course: Panasonic, LG.Philips and Sharp come to mind.
But the small companies also have a unique shot here. Breaking into any sort of industry, especially one as massive and high-risk as consumer electronics, is extraordinarily difficult. But because the plant-toting giants actually have something to gain from the little guys’ success, they not only aren’t crushing them like gnats, they are actually giving them the resources they need to survive. The result is more competition, lower prices, and presumably better product quality all around, meaning that the ultimate winner is you, the bargain-hunting consumer.
Seth Porges writes on future technology and its role in personal electronics for his column, The Futurist. It appears every Thursday and an archive of past columns is available here.