Vizio making PCs? Not as dumb as you think

You, too, may have done a double take when you read that┬átelevision maker Vizio announced at CES on Monday that it’s expanding from the difficult, commoditized business of televisions to … the difficult, commoditized business of Windows-based (s msft) PCs. The company announced for the first time five PCs, including two all-in-one desktops and a trio of notebooks. There aren’t a lot of details available yet; specs and prices were missing from the announcement. Those are things we need to know, but even without those blanks filled in, it’s clear Vizio has picked a great (perhaps the greatest?) time in recent PC industry history to try to make its mark on the industry by taking an entertainment-focused, Windows-based approach to laptops and desktops.

Exploiting the chaos

The top of the PC industry is in disarray right now. Tablets — OK, the iPad(s AAPL)– have created chaos in the world of PCs. The economy isn’t great right now, and more people are realizing that for the most basic computing needs, a tablet can cover much of them, and for a cheaper price in some cases. That means PC sales are chugging along even slower than normal for a down economy.
To add even more craziness, Hewlett-Packard (s HPQ), the king of PCs, decided to get out of the PC-making business this summer. It eventually changed its mind — and CEOs — but not without doing some real damage to its credibility among its partners, customers and retail channel network. There were 92 million PCs shipped worldwide in the third quarter of this year, according to IDC, and HP accounted for the largest chunk: 18 percent. In the U.S., HP’s share is even higher, at 29 percent. That HP thought about sacrificing that gives a window of opportunity to other brands to nudge Best Buy(s BBY), Costco(s COST) and other retailers for more and better shelf space in exchange for true commitment to the industry.
But what of those other established Windows PC brands? In the U.S., HP is followed closely by Dell (s DELL) in popularity, which ships 22 percent of all PCs, but is sinking. That’s 7 percent less than what Dell shipped the year before. The current quarter isn’t expected to see much improvement when updated statistics are released. That’s because Dell has struggled for a while: looking for the right brand identity, style and price point, to look past HP and try to be seen on the level of Apple in terms of quality and cachet, all in the face of flagging demand for its PCs.
Lenovo is surging in the U.S. right now, thanks to established brand recognition and reputation for quality, especially among workers. Toshiba, too, is doing well. But the opening left by the current weakness of HP and Dell is probably the best time a relative newcomer like Vizio could pick to try to squeeze its way into the Windows PC business and hope to get some customers’ attention.

A known quantity

The other thing Vizio has going for it as it enters a new space is decent name recognition (it has been a sponsor of ESPN’s(s dis) HD broadcasts for years, and now sponsors the Rose Bowl) and an association with decent quality at an affordable price. The company made its name when it pulled off in TVs basically what it’s trying to do now in computers: coming from nowhere and taking share from the big guys (Sony, (s sne) Samsung). It did that by being the cheapest TV in the mid- to high-range of TV brands, a calculated strategy that allowed it move from virtual nobody in 2005 to the biggest seller of LCD TVs less than two years later.
Today, Vizio has since expanded to home theater products, Blu-ray players and even Android(s GOOG) tablets, all based on its demonstrated good quality and prices customers are responding to.

Meeting the channel challenge

Perhaps most importantly for a Windows PC maker looking to sell large quantities of mid-range desktops and laptops, Vizio has already hurdled one of the biggest barriers: retail relationships. Electronics retailers have specific amounts of shelf space and place orders based on which products they know will sell. If Vizio was a true nobody, getting space next to HP, Dell, Samsung, Sony, Lenovo, Acer and other Windows PCs would be a challenge. But thanks to years of selling millions of TVs, not to mention its home theater products through these same retailers, it will be much easier for Vizio to strike deals for TVs and laptops, or TVs and an all-in-one desktop, thanks to a bit of leverage and great name recognition among customers.
A subplot to all this is the slow death of big-box electronics retailers in favor of buying on the web from Amazon and others, and the general big-box retailers — Costco, Walmart, (s wmt) Target. (s tgt) Vizio is a reliable brand name for selling huge volumes through outlets that prioritize volume over offering all the top-tier brand names.
Again, we don’t know what Vizio will be selling its desktop or laptops for, nor specific product details, but Vizio has been here before. With a company practiced at making decent quality products and successfully challenging the giants of its industry, it’s hard to bet against Vizio in PCs. Especially at a time like this.