How Vizio is turning over TV market

Want to see how TV is changing? Hang out in the electronics department of a warehouse store.

If you go to Costco, you can see what's happening in the television market.

The warehouse store sells all the major brands--Samsung, Sony, Philips, Panasonic--but the one that seems to get the most traction is Vizio, the small plasma and LCD TV maker that got started a few years ago. (Disclaimer: I was actually in there to buy a pork loin, some tube socks and a bunch of cleaning products--the diversion into TVs happened by chance.)

At least half of the space dedicated to TVs in the store is dedicated to Vizio. The company, meanwhile, is undercutting the more established name brands. Vizio is currently selling a 47-inch 1080p LCD for $1,599. A similar 46-inch LCD TV from Sony goes for $2,399. A 52-inch 1080p from Sharp goes for $2,999.

You get similar price deltas with smaller LCDs and plasmas.

I spoke with two shoppers. They both said the same thing: they had heard of the company, they didn't know much about it, but the prices were intriguing. One said his brother was really happy with his Vizio TV.

Vizio says it can sell at low prices because it keeps its own costs low, which is also the strategy of fast-growing Westinghouse Digital. Vizio also doesn't sell products through electronics superstores, which insist on a higher margin than warehouse stores. Sharp, Samsung, et al, can't come out with cheap models for warehouse stores and more expensive ones for electronics stores without angering the electronics stores. Thus, in the warehouse milieu, they are at a disadvantage.

The warehouse stores, however, are taking an increasing portion of the overall market for electronics, so history seems to be helping Vizio. And if they get a little more brand awareness, you could start seeing a real change in the ranks of the TV world.