Industry

Vizio put out a press release a few months ago for two of its 42" LCD HDTVs, touting in the headline, that Vizio is, "ONE OF THE FASTEST GROWING FLAT PANEL BRANDS IN THE U.S."

On the surface of things, that’s not such a bold claim – after all, who the heck are these guys, anyway? They came from nowhere, so of course they’re growing quickly. When you sell nothing one year, and something the next, your growth rate looks fantastic. So, growth by itself is not necessarily a meaningful statistic. Perhaps all the newcomers, slapping a moniker onto an LCD panel sourced from a Chinese factory somewhere, are all growing and doing well at the expense of the established brands.

However, the AP had an article in same timeframe suggesting the opposite: that consumers are buying flat panel TVs, but only from major brands:

Makers of slim TVs are struggling with higher inventories, but the extent of the problem depends on each company’s position in the market: Smaller names are facing a glut of flat-panel screens while most of the top players say they’re playing catch-up to avoid shortages.

So Vizio is bucking a trend here. The new LCD TVs explain why. They’re reasonably feature-rich, and very well priced. But so is a lot of the competition. What’s important here is that the channel itself is a key part (perhaps the key part) of Vizio’s business model. Traditional big box retail (Best Buy, Circuit City) places a premium on brand: getting shelf space is extremely difficult, but once on the shelf you have to compete with Sony and Samsung. This is what the AP is talking about, and it helps explain why Sony, once it got its act together with some decent products, is now back on top of the game. Sony’s brand stands for high quality televisions at a moderate premium; that’s precisely what the Bravia line delivers, and consumers are buying them. (In September, the L.A. Times reported that Sony has regained its position as the U.S.’ top TV manufacturer after falling behind in the late 1990s due to its slow recognition of flat-panel TVs. Sony’s entrance into the LCD market has helped the company increase its share of the total market to 28%.)

So what’s going on with Vizio? The key is distribution: Vizio aimed beyond the big box stores, instead targeting a different, even bigger "big box": warehouse clubs. Costco in particular is a happy home for new discount brands because the warehouse chain mixes in high end brands with relative unknowns; launching your plasma at Costco does not automatically equate your brand with discount merchandise.

Of course, in terms of sheer volume, the biggest game-changer of all may be Wal~Mart, not the warehouse clubs or Best Buy. As prices drop on flat panel TVs — easily the most desired big ticket CE item — more of them end up in the land where there are Always Low Prices. Vendors who can make peace with Wal~Mart’s margin and distribution requirements (and sometimes hyper-competitive house brands) will be able to grow their sales volumes tremendously. They may even be able to build a brand where they have none – but it won’t be a premium brand.

-avi

It’s Not the Products, It’s the Distribution Read More

In last month’s CEDIA Highlights post, I noted two projectors that broke through the clutter (and there was a lot of clutter: my in box has dozens and dozens of press releases). There was a third announcement that caught my eye, and, surprisingly, it, too, was projector-related.

THX is now certifying home projectors.

On the surface, this does not seem surprising – THX certifies just about everything. In fact, don’t they already have a certification program for displays? It certainly seems like they did. (Actually, they did – but only as part of their commercial theater certification program.) THX is starting out with ludicrously expensive Runco models, but the program should trickle down to more affordable home projectors, rear projection televisions, and flat panel displays.

Not everyone loves THX. First of all, it’s a licensing program. It costs money to get the logo, but doesn’t offer anything concrete in exchange; theoretically, if your product meets all of THX’s specifications, you could be THX-certifiable without actually being THX-certified and pass the savings along to your customers. A bigger issue is that THX’s specifications are based on a specific philosophy. On the audio side, the philosophy includes notions of how a speaker should be constructed (small satellites, big subwoofers, and a specific crossover type and crossover frequency), how soundtracks mixed for commercial theaters should be adapted for the home environment, and how rear speakers should be integrated into a system. Reasonable people at, say, a speaker manufacturer, could disagree on an aspect of the technical approach that THX certification demands, but because the THX logo is respected in the market, they may lose business by building things their way instead of THX’s methodology.

THX Certified Display testing includes the following:

• Front of Screen (FOS) Testing
  • Luminance
  • Contrast
  • Color Gamut
  • Gamma
  • Uniformity
  • Max Resolution
• Video Signal Processing Testing
  • Scaling
  • Deinterlacing
  • Motion/Video Conversion

I am 100% confident that there will be controversy over THX’s video specifications. I couldn’t tell you what specifically will cause hand wringing – or whether it will be a specification of omission: THX’s video certification program was been rightly villified several years back for certifying terrible letterbox transfers; the specs simply didn’t go far enough in that case.

Still, I believe that, on balance, THX is an incredibly positive force for home theater audio and video reproduction. If you assemble a THX-approved system, even from different vendors, you know that the individual products will perform to a certain set of specifications, and that they were designed to complement each other. I also appreciate the notion of a certification program in the first place. Sure, Vendor X has a good reputation, and Vendor Y has a powerful brand. But THX drives the entire industry, for better or worse, towards a unified A/V philosophy. Aside from buying every component in your system from a single brand — as if that were even possible (outside of Sony and Samsung) — THX assures a level of uniformity of purpose and performance in home theater products. I like that.

-avi

CEDIA Highlights, Part II Read More

To all the PR people trying to set up meetings with me at CEDIA this weekend: I’m not there. I just got back from CTIA before heading out again early next week, and CEDIA just didn’t make it onto the schedule this year.

Of course, I’m following the show remotely. So far, only a couple of announcements have really broken through the clutter, and they’re two projectors that offer clear value propositions:

• Sony’s 1080p VPL-VW50 SXRD front projector, which brings essentially the same technology from the $25,000 Qualia line (that then showed up in the $10,000 VPL-VW100 front projector, and then again in a line of Bravia rear projection TVs) down to $5,000. In the U.S., where big screen TVs have long been available (along with the floor space to put them) mid-priced projectors often sell well. Overseas, where a projector is replacing a big screen TV, not supplementing it, budget projectors tend to do better. Regardless, $3,000 – $5,000 is a sweet spot for pricing, and now performance follows. Sony can claim it uses unique technology for superior image quality, which fits nicely with its brand history (and just might be true. I personally prefer the slightly smoother picture from SXRD/D-ILA technologies compared to DLP or LCD).

• At the opposite end of the price spectrum, if you’ve got hundreds of thousands of dollars to spend on a Bentley, you may want to consider a Runco Signature Cinema SC-1 instead (starting price: $250K. More if you want the 2.35:1 version). And a 40 foot screen for your home theater. While you might think there is no market for such ridiculously expensive toys, think again: when I last spoke to TI, they admitted that a fair number of professional DLP products aimed at commercial theaters end up in the homes of the super-wealthy film enthusiast. Or at least the super-wealthy conspicuous consumer who needs the absolute best of everything.

-avi

CEDIA Highlights, Part I Read More