Vizio Inc of the US, which topped LCD TV sales in the third quarter of 2003, is now drawing interest when it comes to forecasting the future of the FPD TV market.
In a forum titled "How to win the price war: Forecasts for the FPD industry" (session code A-3) at FPD International 2007, all three analysts in the session referred to Vizio and revealed their analyses of the company's future strategy and its impact on other TV manufacturers. In their analyses, they indicated risks that could be the company's Achilles heel when it expands its business.
Yasuo Nakane, director analyst of Equity Research at Deutsche Securities Inc., predicted that Vizio's business would continue to grow in 2008. He did, however, cite four business risks facing Vizio now.
They are (1) the possibility that the company may run short of panels if demand strengthens, (2) a heavy dependency on external companies in many areas including development and manufacturing, (3) patent-related issues such as Funai Electric Co Ltd's lawsuit against Vizio and (4) after-care service being outsourced to external companies.
Above all, the risk of panel procurement is concerned in particular. Vizio is currently supplied LCD panels by LG. Philips LCD Co Ltd of Korea and other companies. A large portion of Vizio's products is 40-inch and larger screen models that major TV manufacturers are marketing as their mainstay.
As long as panels are abundantly supplied, it is easy for Vizio to procure them. If demand strengthens, however, panel suppliers might find it difficult to sell their panels to Vizio, which impacts the business of major TV manufacturers that are better customers for panel manufacturers.
Regarding this matter, Masahiko Ishino, senior analyst, research service, equity research, Mitsubishi UFJ Securities Co Ltd, pointed out, "A significant amount of money is required to purchase a large number of LCD panels. When raising funds for such a purchase, however, banks don't loan money to LCD TV manufacturers as they know that the LCD TV business isn't very profitable and could even result in a loss."
Nakane suggested, "Vizio may suddenly shift its mainstay products to PDP TVs" if wholesale retailers like Costco and Wal-Mart attempt to sell Vizio products in immense quantities.
Vizio reportedly plans to enter the European markets as early as 2008. The company's business expansion relies on whether or not it can establish a structure to stabilize its provision of more products than before.