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post #121 of 144 Old 05-25-2014, 12:07 AM
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Originally Posted by rogo View Post

Sony may have temporarily bought into the mfg. of panels from other vendors (e.g. they temporarily own a portion of Samsung's production via S-LCD). They never built any of that production and don't currently own any production.

They have no relevant expertise in making panels at all, outside of the tiny production of broadcast panels they are involved in.

When we talk about LG upgrading a fab / retrofitting it to make OLED, we are taking a giant, volume LCD maker. They know about panel making.

Sony? No.

And, for what it's worth, Sony isn't alone here.

But it's important to understand this: No one has made money being a volume TV seller w/o also making panels. No one other than Vizio, which succeeds because of key factors (1) huge volume (2) eking out tiny margins on huge volume (3) cutting out most of a tier in the distribution chain.

So only Samsung, LG, Sharp (very recently) and Vizio are making a profit, yes?
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post #122 of 144 Old 05-25-2014, 08:31 AM
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Quote:Quote:
Originally Posted by rogo View Post

Sony may have temporarily bought into the mfg. of panels from other vendors (e.g. they temporarily own a portion of Samsung's production via S-LCD). They never built any of that production and don't currently own any production.

They have no relevant expertise in making panels at all, outside of the tiny production of broadcast panels they are involved in.

This is right where I get confused by your message.  Vizio has zero experience in making panels.  And Samsung has tons of experience and can't quite figure out OLED.  And Sony didn't "make" their QD Triluminus, but they designed it and jobbed it out.  They can't design OLED and job that out too?
 
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But it's important to understand this: No one has made money being a volume TV seller w/o also making panels. No one other than Vizio, which succeeds because of key factors (1) huge volume (2) eking out tiny margins on huge volume (3) cutting out most of a tier in the distribution chain.

 

Ah, ok.  Does this mean that Vizio is doing something that Sony cannot?  But #1 and #2 above are the same: a model of "making it up on volume".  And they can only do that by #3.  How does Vizio distribute differently?


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post #123 of 144 Old 05-25-2014, 10:51 AM - Thread Starter
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Originally Posted by tgm1024 View Post

This is right where I get confused by your message.  Vizio has zero experience in making panels.  And Samsung has tons of experience and can't quite figure out OLED.  And Sony didn't "make" their QD Triluminus, but they designed it and jobbed it out.  They can't design OLED and job that out too?
 

OLED is entirely different game than LCD.
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Ah, ok, so Vizio is doing something that Sony cannot?  But #1 and #2 above are the same: a model of "making it up on volume".  And they can only do that by #3.  How does Vizio distribute differently?

I wonder how much truth is in my speculation that Vizio is in fact a front to chinese LCD manufacturers and TV producers? By this Vizio could beat everybody else on price but now are moving into high-end technology too.

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post #124 of 144 Old 05-25-2014, 12:52 PM
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Sony has been losing money for a long time, I'm not surprised. If you look at their corporate figures for years after the ps3 launch they had a net yen loss as they sold easch console at a loss on the consumer level, which is unheard of for a company, and after sparing no expense during its development. They counted on people buying Sony tvs and first party games with the console but they never caught up. Most agree it either started or began spiralling out if control here. The "ivory tower" composition method used for its first gen ps3's was show-stopping and completely unbeneficial. But they stopped manufacturing panels and started buying them from samsung which was a great move considering nobody really even knew it was happening; discrete cost cutting measures. They cut tons of corners with all the ps3 revisions and the ps4 but most of their other products are still too good for their own good. They never were able to manage all their idustries together, develop products where the costs were saved in hidden places and the right aspects were subsidized to the right outlets. Believe it or not as much as they charge for their premium products, the profit they make on them has always still been minimal because they make poor decisions on which components to spare no expense on (usually none of them), which seldom adds to the overall function of the product. So they dig themselves holes with almost all of their flagship products. They actually learned well with the ps4 by using off the shelf pc parts, a poor hard drive but which suffices for its limited purpose, an outdated graphics card boosted by almost too much ram, as ram is cheap by comparison. It's all about cutting costs in discrete ways, which it took far too long for them to learn. Only in the past few years have they pushed out budget friendly products in conjunction with their flagships, which are still to overpriced, so the rift between them is too large. I love their premium products, but the company is poorly managed.

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post #125 of 144 Old 05-26-2014, 05:53 AM
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Reality Check:

"Sony Turnaround Strategy Falls Flat - TVs and Blu-ray May Be Targeted: Report and Commentary"

http://hometheater.about.com/b/2014/05/01/sony-turnaround-strategy-falls-flat-blu-ray-may-be-targeted-report-and-commentary.htm

"Dateline: 05/01/2014
Despite an aggressive turnaround strategy spearheaded by CEO, Kaz Harai that included significant layoffs, exiting the PC business, and trimming its TV offerings, it looks like Sony is once again forecasting a financial loss in its latest financial projections.
Sony is definitely in a tough spot, along with other Japan-based consumer electronics companies (Panasonic, Sharp, Toshiba) as Korea-based CE giant Samsung and LG continue to increase their worldwide consumer electronics dominance, and other companies, such as Vizio and China-based TCL, push for higher profiles in the U.S. market. Maintaining TV market share has been especially difficult, which puts pressure on Sony to possibly do the unthinkable, and sell of its TV division, if it can't remain viable.

However, TVs aren't the only sore spot. A rising loss in its Blu-ray Disc business (mostly in Europe) is also becoming a factor in Sony's financial performance, and as a result, Harai is now putting out hints that the format that it developed, and aggressively fought for (remember HD-DVD?) may be targeted for downscaling."

http://www.businessweek.com/news/2014-05-01/sony-posts-loss-18-percent-larger-than-forecast-on-pc-unit-charges

"Sony Corp. (6758), the maker of Xperia smartphones and PlayStation consoles, posted a loss wider than forecast as Chief Executive Officer Kazuo Hirai’s turnaround founders amid slumping consumer electronics sales."
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post #126 of 144 Old 05-26-2014, 09:59 AM
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True their large scale investment on blu Ray royally screwed them too

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post #127 of 144 Old 05-26-2014, 10:04 AM
 
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Don't be so defensive, fella. He was just adding to the conservation. wink.gif
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post #128 of 144 Old 05-26-2014, 10:07 AM
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The conservation? Lol. I didn't mean to be defensive I just thought "reality check" was aimed at my post. It's all good smile.gif in fact I'll change it

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post #129 of 144 Old 05-26-2014, 10:14 AM
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This will be a sad day for me too, as if OLED didn't work out the only place I'd look back to would be Sony. Nothing save their XBR series and the Sharp Elite has made, and continues to make, LCD worthwhile. Somehow they take Samsung's panels and turn them into televisions massively better than Sammie ever can! Love me those XBR's.

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post #130 of 144 Old 05-26-2014, 10:22 AM
 
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Understood on the seemingly personal direction it was aimed, though I inspect it wasn't intended that way since he didn't quote you.

Panasonic (and their AX900) would be the only other direction I could conceivably look since Pioneer is long gone. Sony and Panasonic (and Sharp to a lesser extent) are the sole remaining Japanese giants holding on by what seems like a thread.
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post #131 of 144 Old 05-26-2014, 01:47 PM
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Originally Posted by vinnie97 
Understood on the seemingly personal direction it was aimed, though I inspect it wasn't intended that way since he didn't quote you.

Panasonic (and their AX900) would be the only other direction I could conceivably look since Pioneer is long gone. Sony and Panasonic (and Sharp to a lesser extent) are the sole remaining Japanese giants holding on by what seems like a thread.
You should check out the AX800U since it beats - approaches - beats Plasma Picture Quality smile.gif
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post #132 of 144 Old 05-26-2014, 01:54 PM
 
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heh...I don't believe it for a second. I've been spoiled by not just your average plasma but two top-of-the lines for the last 6 years.
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post #133 of 144 Old 05-26-2014, 01:57 PM
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Understood on the seemingly personal direction it was aimed, though I inspect it wasn't intended that way since he didn't quote you.

Panasonic (and their AX900) would be the only other direction I could conceivably look since Pioneer is long gone. Sony and Panasonic (and Sharp to a lesser extent) are the sole remaining Japanese giants holding on by what seems like a thread.

You are overlooking Toshiba - the L9400U looks to be the best value in the performance market today.

And on the subject of Toshiba, this snippet put a smile on my face: "A rising loss in its Blu-ray Disc business (mostly in Europe) is also becoming a factor in Sony's financial performance, and as a result, Harai is now putting out hints that the format that it developed, and aggressively fought for (remember HD-DVD?) may be targeted for downscaling."

I was a fan of Toshiba's HDDVD format, one of the most compelling arguments for was it's much lower cost, both in terms of media as well as up-front capital investment (since HDDVD could be produced on standard DVD lines with just a few relatively inexpensive modifications, while Blue-Ray was more expensive and required entirely new manufacturing lines).

Sony's 'balls-to-the-wall beat Toshiba at any cost' marketing effort included massive capital investments in manufacturing capacity to take away any advantage Toshiba had in terms of cost-effective delivery, and in the end, it looks like those capital investments are coming back to haunt Sony now.

I still have my HDDVD player in case Toshiba tries to rise from Sony's BlueRay ashes and keep high definition alive biggrin.gif
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I haven't forgotten, but it seems there was a fair bit of overestimation as to how many zones the 55" Toshiba had, so my enthusiasm has dipped considerably.

And um, I loved HD DVD as much as the next red head, but the better format won (in spite of my disdain for Java and the often ruthless, stubborn, boneheaded moves Sony makes). wink.gif I let go of any animosity from the fallout of that skirmish years ago. Obviously, Sony overestimated the demand, but they were not alone in failing to anticipate the global economic recession that arrived just after the conclusion of said format skirmish (and arguably has not let up since). Besides, I have great doubt a 3D disc solution would have been as easy to incorporate as it was for Blu-ray. Finally, there have been reports of a lot of old HD DVD discs (particularly from Warner) showing signs of degradation and ensuing playback failure. As you might have guessed, I dumped all my HD DVD hardware and software years ago.
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post #135 of 144 Old 05-26-2014, 02:20 PM
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I haven't forgotten, but it seems there was a fair bit of overestimation as to how many zones the 55" Toshiba had, so my enthusiasm has dipped considerably.

Too early to tell, and I'm not sure the L7400U is a direct reflection of the L9400U in any case. Katzmier reported that the three best LED/LCDs he saw at CES were the X950B, the Reference Series, and the L9400U. I'd suggest we reserve judgment on Toshiba until after the 2014 VE Shootout in July.
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And um, I loved HD DVD as much as the next red head, but the better format won (in spite of my disdain for Java and the often ruthless, stubborn, boneheaded moves Sony makes). wink.gif I let go of any animosity from the fallout of that skirmish years ago. Obviously, Sony overestimated the demand, but they were not alone in failing to anticipate the global economic recession that arrived just after the conclusion of said format skirmish (and arguably has not let up since). Besides, I have great doubt a 3D disc solution would have been as easy to incorporate as it was for Blu-ray. Finally, there have been reports of a lot of old HD DVD discs (particularly from Warner) showing signs of degradation and ensuing playback failure. As you might have guessed, I dumped all my HD DVD hardware and software years ago.

Sounds like you know more about it than me - I stopped paying attention as soon as Sony won (and I picked up a PS3 biggrin.gif) and had not heard about HDDVD degradation.

I think that while the marketing of Toshiba is weaker (by far) than the 'Big Two' (Sony & Panasonic), Toshiba's engineering and technical expertise is at least as good and probably a bit superior to the 'big 2'

If I had to pick which Japanese CE company is pursuing the most 'Vizio-like' strategy for their TV business, I believe that is pretty clearly Toshiba. So if you assume that strategy is a winning one, I would not lump Toshiba in with the others and would avoid premature conclusions.

Still unclear to me if the 65" Vizio Reference Series and the 65" Toshiba L9400U share internals such as LCD panel and BLU or not...
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post #136 of 144 Old 05-26-2014, 03:05 PM
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Too early to tell, and I'm not sure the L7400U is a direct reflection of the L9400U in any case.
I do think it send a clear message that the people expecting the L9400U to have 300+ zones are going to be very disappointed. The Toshiba slide in the Polish forum review of the L7453 says the L9400 starts at 48 zones. Presumably that's for the 50" the US won't see. So the 58" has ~64 and the 65" maybe 80? If the Vizio P has 96 as T. Norton's S&V review of the 55" E-series states the Toshiba L9400 doesn't look so appealing (by the numbers).

Still I'm not counting anyone out until mid July after the shoot-out. Frankly my biggest fear is that I will end up wanting to hold out for the 65" R-series after the VE shoot-out instead of buying something based on great performance. The Sony costs too much and may not have a very high zone count. None of the other competitors seem to have high zone counts either. LG's OLED tech still seems to have some problems to solve... Basically there's nothing worth buying.
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post #137 of 144 Old 05-26-2014, 04:26 PM
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Too early to tell, and I'm not sure the L7400U is a direct reflection of the L9400U in any case.
I do think it send a clear message that the people expecting the L9400U to have 300+ zones are going to be very disappointed. The Toshiba slide in the Polish forum review of the L7453 says the L9400 starts at 48 zones. Presumably that's for the 50" the US won't see. So the 58" has ~64 and the 65" maybe 80? If the Vizio P has 96 as T. Norton's S&V review of the 55" E-series states the Toshiba L9400 doesn't look so appealing (by the numbers).

Still I'm not counting anyone out until mid July after the shoot-out. Frankly my biggest fear is that I will end up wanting to hold out for the 65" R-series after the VE shoot-out instead of buying something based on great performance. The Sony costs too much and may not have a very high zone count. None of the other competitors seem to have high zone counts either. LG's OLED tech still seems to have some problems to solve... Basically there's nothing worth buying.

We're basically in very much the same boat.

I just hope the L9400 is the exact same TV that Toshiba was showing at CES this year. If they showed a higher-performance Japanese TV at CES and announced the L9400 based on that but then changed it in any material way related to picture quality (such as reducing the number of dimming zones), it will be the last straw with me (and I will be ready to lump Toshiba in with the others).

Following the VE shootout, I'll be awaiting first customer reports of the 65" 4K WOLED to see if the second-generation products has reduced / eliminated the problems being reported on the gen-1 panels, and will either expect pricing and timing details on the 65" R Series and Panasonic AX900 or will forget about them.

If there is not an obvious reason to wait until the end of the year for either the 65" WOLED, the Vizio R, or possibly the Panasonic AX900, I'll be down to three choices:

1/ just hold out and make do for another year with my 55" ELPD

2/ pick up the 65" Vizio M Series for $1500

3/ pony up another $700 for the Vizio P Series because the additional dimming zones noticeably improve dark-levels and shadow detail without noticeable blooming (and I think it will hold its resale value better than the 1080p set).

4/ I'd still consider the L9400U if it proves to be Elite-like for half the price, but it's going to have to be at least 50% better than the P Series in a noticeable way.

High hopes for the Shootout in July!
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post #138 of 144 Old 05-26-2014, 06:27 PM
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So only Samsung, LG, Sharp (very recently) and Vizio are making a profit, yes?
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Ah, ok.  Does this mean that Vizio is doing something that Sony cannot?  But #1 and #2 above are the same: a model of "making it up on volume".  And they can only do that by #3.  How does Vizio distribute differently?

Profit is a funny thing.

Samsung and LG make much more money on TVs than it nominally appears. Why? Because they sell themselves panels that are sold at a profit. Those display divisions make money doing that. Then, thanks to volume, excellent marketing, the right product mix, etc., the two make some money actually selling TVs on top of that.

Sharp is looking to make $300 million or so this year -- as a corporation -- after years of massive losses. That sounds like something, but let's look at some caveats. First, Sharp is a $27 billion corporate roughly. That kind of profitable -- which the company is boldly looking to more than double next year -- is a 1% margin. That's awful.

Second, while the LCD division contributes much of what constitutes profitability for Sharp, it appears all-but certain the TV division itself continues to lose money. Sharp sells millions upon panels to third parties at this point, both large and small ones. Those all come with a positive gross margin that's likely substantial. Unlike Samsung and LG, Sharp manages to take panels, package them into TVs and still lose money on that operation. It's possible that retailing televisions might eventually break even again for Sharp, but it appears they are only in the business to (a) promote a flagging brand and (b) maintain higher fab utilization. It seems unlikely they'd remain in the TV business if they could sell more wholesale panels to others.

Vizio is harder to get a handle on. The Forbes private company list had it estimated at a $3 billion company in 2012, with about 400 employees. Given how many of those are customer service, it's hard to overemphasize how lean this operation is compared to other manufacturers. Sony has a sales force, trainer force et al. that is a staff of full-time corporate employees who are paid to get Sony products into retail and promoted well. It has dedicated marketers who help sell those products online, in print, on television. Vizio has none of this. (Sony probably has 3-5x more people in product design, engineering, et al. than Vizio does too.) It's a lean, clean disruption machine. It sells almost entirely through big box using a tiny sales team that offers retailers a solid margin on a low-priced product that promises to bring customers into stores (and still allow the sales of warranties, cables, mounts, etc.)

Vizio was selling 7 million TVs in 2010, based on that it appears to be around 10 million now. It's also entered the low-margin PC business. If we are to believe the numbers on revenue (and they seem plausible and are widely reported), it's average wholesale price is below $300. The margins it makes per unit are vanishingly small, but the model works for Vizio. How, you may ask. The answer: Vanishingly small overhead. Vizio's entire payroll (benefits included) is likely around $40 million. It's marketing budget is mostly sponsoring the Rose Bowl. The company spends a total of $10 per TV it seems on the business of being in business. That's almost certainly less than 1/10 of what competitors spend.

My bet is that Vizio is profitable on the most threadbare of margins. What it isn't doing is making money hand over fist. In fact, I doubt it's clearing $100 million. What it does cannot be replicated by Sony any more than Apple could replicate the $69 tablets sold in Asia. The business models are too different.
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There is no difference in HDMI cables. If you can see the picture without visible dropouts or sparklies, the cable is working at 100%. No other cable will display a better version of that picture. You're simply wrong if you think there is a better digital cable than one that is already working.
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post #139 of 144 Old 05-26-2014, 06:59 PM
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Glad I bought a Sony this year , my third Sony over the years ,all have been good sets and good picture . Interesting to see what shakes out . If they they sell the TV division to Foxconn they might be able to maintain reasonable quality ,Foxconn makes TV's PS 3 and 4 and other stuff for Sony now ,ofc iPhones ,iPads,iPods, HP PC's ,Xbox and lots of other stuff also.
so it seems they can make premium products .


I read somewhere ( maybe Digi-times or Display search ) that Sony was going to have the new TV Subsidiary source the majority of TV production at Sony factories that should be interesting .

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post #140 of 144 Old 05-27-2014, 06:16 AM
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So only Samsung, LG, Sharp (very recently) and Vizio are making a profit, yes?
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Ah, ok.  Does this mean that Vizio is doing something that Sony cannot?  But #1 and #2 above are the same: a model of "making it up on volume".  And they can only do that by #3.  How does Vizio distribute differently?

Profit is a funny thing.

Samsung and LG make much more money on TVs than it nominally appears. Why? Because they sell themselves panels that are sold at a profit. Those display divisions make money doing that. Then, thanks to volume, excellent marketing, the right product mix, etc., the two make some money actually selling TVs on top of that.

Sharp is looking to make $300 million or so this year -- as a corporation -- after years of massive losses. That sounds like something, but let's look at some caveats. First, Sharp is a $27 billion corporate roughly. That kind of profitable -- which the company is boldly looking to more than double next year -- is a 1% margin. That's awful.

Second, while the LCD division contributes much of what constitutes profitability for Sharp, it appears all-but certain the TV division itself continues to lose money. Sharp sells millions upon panels to third parties at this point, both large and small ones. Those all come with a positive gross margin that's likely substantial. Unlike Samsung and LG, Sharp manages to take panels, package them into TVs and still lose money on that operation. It's possible that retailing televisions might eventually break even again for Sharp, but it appears they are only in the business to (a) promote a flagging brand and (b) maintain higher fab utilization. It seems unlikely they'd remain in the TV business if they could sell more wholesale panels to others.

Vizio is harder to get a handle on. The Forbes private company list had it estimated at a $3 billion company in 2012, with about 400 employees. Given how many of those are customer service, it's hard to overemphasize how lean this operation is compared to other manufacturers. Sony has a sales force, trainer force et al. that is a staff of full-time corporate employees who are paid to get Sony products into retail and promoted well. It has dedicated marketers who help sell those products online, in print, on television. Vizio has none of this. (Sony probably has 3-5x more people in product design, engineering, et al. than Vizio does too.) It's a lean, clean disruption machine. It sells almost entirely through big box using a tiny sales team that offers retailers a solid margin on a low-priced product that promises to bring customers into stores (and still allow the sales of warranties, cables, mounts, etc.)

Vizio was selling 7 million TVs in 2010, based on that it appears to be around 10 million now. It's also entered the low-margin PC business. If we are to believe the numbers on revenue (and they seem plausible and are widely reported), it's average wholesale price is below $300. The margins it makes per unit are vanishingly small, but the model works for Vizio. How, you may ask. The answer: Vanishingly small overhead. Vizio's entire payroll (benefits included) is likely around $40 million. It's marketing budget is mostly sponsoring the Rose Bowl. The company spends a total of $10 per TV it seems on the business of being in business. That's almost certainly less than 1/10 of what competitors spend.

My bet is that Vizio is profitable on the most threadbare of margins. What it isn't doing is making money hand over fist. In fact, I doubt it's clearing $100 million. What it does cannot be replicated by Sony any more than Apple could replicate the $69 tablets sold in Asia. The business models are too different.

 

Thanks for a very very valuable explanation!

 

That certainly does seem like a corporate model and culture that just cannot be emulated overnight.

 

Vizio operating with only a $40M burn rate?

 

Is that $10 per TV business-of-staying-in-business real though?  Whoa.

 

Regarding the margins: IF they manage to create the R series (I still don't think they will) and IF they manage to create the P series both at the quality they're touting at the non-CES CES showing, then can they mantain such a margin model and razor-razor thin overhead????  You just can't pull quality out of nowhere with no money and good wishes.


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post #141 of 144 Old 05-27-2014, 10:55 AM
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So only Samsung, LG, Sharp (very recently) and Vizio are making a profit, yes?
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Ah, ok.  Does this mean that Vizio is doing something that Sony cannot?  But #1 and #2 above are the same: a model of "making it up on volume".  And they can only do that by #3.  How does Vizio distribute differently?

Profit is a funny thing.

Samsung and LG make much more money on TVs than it nominally appears. Why? Because they sell themselves panels that are sold at a profit. Those display divisions make money doing that. Then, thanks to volume, excellent marketing, the right product mix, etc., the two make some money actually selling TVs on top of that.

Sharp is looking to make $300 million or so this year -- as a corporation -- after years of massive losses. That sounds like something, but let's look at some caveats. First, Sharp is a $27 billion corporate roughly. That kind of profitable -- which the company is boldly looking to more than double next year -- is a 1% margin. That's awful.

Second, while the LCD division contributes much of what constitutes profitability for Sharp, it appears all-but certain the TV division itself continues to lose money. Sharp sells millions upon panels to third parties at this point, both large and small ones. Those all come with a positive gross margin that's likely substantial. Unlike Samsung and LG, Sharp manages to take panels, package them into TVs and still lose money on that operation. It's possible that retailing televisions might eventually break even again for Sharp, but it appears they are only in the business to (a) promote a flagging brand and (b) maintain higher fab utilization. It seems unlikely they'd remain in the TV business if they could sell more wholesale panels to others.

Vizio is harder to get a handle on. The Forbes private company list had it estimated at a $3 billion company in 2012, with about 400 employees. Given how many of those are customer service, it's hard to overemphasize how lean this operation is compared to other manufacturers. Sony has a sales force, trainer force et al. that is a staff of full-time corporate employees who are paid to get Sony products into retail and promoted well. It has dedicated marketers who help sell those products online, in print, on television. Vizio has none of this. (Sony probably has 3-5x more people in product design, engineering, et al. than Vizio does too.) It's a lean, clean disruption machine. It sells almost entirely through big box using a tiny sales team that offers retailers a solid margin on a low-priced product that promises to bring customers into stores (and still allow the sales of warranties, cables, mounts, etc.)

Vizio was selling 7 million TVs in 2010, based on that it appears to be around 10 million now. It's also entered the low-margin PC business. If we are to believe the numbers on revenue (and they seem plausible and are widely reported), it's average wholesale price is below $300. The margins it makes per unit are vanishingly small, but the model works for Vizio. How, you may ask. The answer: Vanishingly small overhead. Vizio's entire payroll (benefits included) is likely around $40 million. It's marketing budget is mostly sponsoring the Rose Bowl. The company spends a total of $10 per TV it seems on the business of being in business. That's almost certainly less than 1/10 of what competitors spend.

My bet is that Vizio is profitable on the most threadbare of margins. What it isn't doing is making money hand over fist. In fact, I doubt it's clearing $100 million. What it does cannot be replicated by Sony any more than Apple could replicate the $69 tablets sold in Asia. The business models are too different.

Well said - couldn't have summarized the situation any better myself, other than to add the other big Taiwanese panel manufacturers like AUO into the mix. While Samsung, LG, and Sharp can do a certain amount of commodity panel purchasing for their TV businesses, Vizio buys all of their panels from independent panel manufacturers like AUO, Sharp and LG and this probably allows them to do the best job playing those panel manufacturers off against each other to get the most competitive pricing. Sony, Panasonic and Toshiba are far less successful in this regard (partly because of their much lower volume).
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post #142 of 144 Old 05-27-2014, 10:57 AM
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So only Samsung, LG, Sharp (very recently) and Vizio are making a profit, yes?
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Originally Posted by tgm1024 View Post

Ah, ok.  Does this mean that Vizio is doing something that Sony cannot?  But #1 and #2 above are the same: a model of "making it up on volume".  And they can only do that by #3.  How does Vizio distribute differently?


Profit is a funny thing.


Samsung and LG make much more money on TVs than it nominally appears. Why? Because they sell themselves panels that are sold at a profit. Those display divisions make money doing that. Then, thanks to volume, excellent marketing, the right product mix, etc., the two make some money actually selling TVs on top of that.


Sharp is looking to make $300 million or so this year -- as a corporation -- after years of massive losses. That sounds like something, but let's look at some caveats. First, Sharp is a $27 billion corporate roughly. That kind of profitable -- which the company is boldly looking to more than double next year -- is a 1% margin. That's awful.


Second, while the LCD division contributes much of what constitutes profitability for Sharp, it appears all-but certain the TV division itself continues to lose money. Sharp sells millions upon panels to third parties at this point, both large and small ones. Those all come with a positive gross margin that's likely substantial. Unlike Samsung and LG, Sharp manages to take panels, package them into TVs and still lose money on that operation. It's possible that retailing televisions might eventually break even again for Sharp, but it appears they are only in the business to (a) promote a flagging brand and (b) maintain higher fab utilization. It seems unlikely they'd remain in the TV business if they could sell more wholesale panels to others.


Vizio is harder to get a handle on. The Forbes private company list had it estimated at a $3 billion company in 2012, with about 400 employees. Given how many of those are customer service, it's hard to overemphasize how lean this operation is compared to other manufacturers. Sony has a sales force, trainer force et al. that is a staff of full-time corporate employees who are paid to get Sony products into retail and promoted well. It has dedicated marketers who help sell those products online, in print, on television. Vizio has none of this. (Sony probably has 3-5x more people in product design, engineering, et al. than Vizio does too.) It's a lean, clean disruption machine. It sells almost entirely through big box using a tiny sales team that offers retailers a solid margin on a low-priced product that promises to bring customers into stores (and still allow the sales of warranties, cables, mounts, etc.)


Vizio was selling 7 million TVs in 2010, based on that it appears to be around 10 million now. It's also entered the low-margin PC business. If we are to believe the numbers on revenue (and they seem plausible and are widely reported), it's average wholesale price is below $300. The margins it makes per unit are vanishingly small, but the model works for Vizio. How, you may ask. The answer: Vanishingly small overhead. Vizio's entire payroll (benefits included) is likely around $40 million. It's marketing budget is mostly sponsoring the Rose Bowl. The company spends a total of $10 per TV it seems on the business of being in business. That's almost certainly less than 1/10 of what competitors spend.


My bet is that Vizio is profitable on the most threadbare of margins. What it isn't doing is making money hand over fist. In fact, I doubt it's clearing $100 million. What it does cannot be replicated by Sony any more than Apple could replicate the $69 tablets sold in Asia. The business models are too different.

Thanks for a very very valuable explanation!

That certainly does seem like a corporate model and culture that just cannot be emulated overnight.

Vizio operating with only a $40M burn rate?

Is that $10 per TV business-of-staying-in-business real though?  Whoa.

Regarding the margins: IF they manage to create the R series (I still don't think they will) and IF they manage to create the P series both at the quality they're touting at the non-CES CES showing, then can they mantain such a margin model and razor-razor thin overhead????  You just can't pull quality out of nowhere with no money and good wishes.

The answer to your question is leveraged R&D: primarily Dolby and AUO (and also possibly Toshiba), at least for the 65" R Series.
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post #143 of 144 Old 05-28-2014, 11:03 PM
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Wow this sucks, I have had great luck with Sony TVs over the last decade and even now....... I think they missed the dart board completely with their computer line, although I still have a Pent. 4 Vaio still kicking!
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post #144 of 144 Old 05-29-2014, 12:47 AM
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I think Sony TV will be around a while just maybe as a subsidiary of Sony owned by Sony or a joint venture (hopefully with Toshiba or Panasonic or maybe Sharp ) that may allow more cost effective quality and innovation R&D also supply chain efficiencies and lower unit costs and some *limited vertical integration of goods for the J.V. partners along with reduced SAG expense .

There are lots of global fortune 500 -1000 companies that have had and have successful owned subsidiaries for decades.
Warren Buffet AKA ‎Berkshire Hathaway has a few of those .

All 4 companies have capable LCD video processing
with probably Sony and Toshiba leading in LCD volume . Toshiba has a huge profitable global semiconductor business maybe they could leverage that and use common silicon and differentiate it with Firmware like quite a few TV companies including Sony and Visio do now with Mediatek and Marvel silicon.

Sharp is the only one of the 4 companies making large TV panels in volume at all so maybe a 3 or 4 way J.V wouldn't be out of the question to allow more vertical integration similar to the Japan Display Sony, Toshiba, and Hitachi small panel J V that could also maybe be tooled up to make larger TV panels ..

Lots of ways to skin a cat here although I'm not so sure the bulk of manufacturing will be sustainable in Japan in the long term so overseas manufacturing and assy. will still as now have to be part of the long term business plan . Foxconn could build the ~60 - 65 - 70" and above sets for US/Can /N.a./S.A. sales at some at the existing US plants or the new Pennsylvania plant they are building .

Foxconn is also buying Sony's TV factory in Tijuana and possibly also the Mexicali plant that Sony is otherwise closing .


In the short term Sony might end up assigning more production from the newly created owned subsidiary into Asian Sony factories rather than subbing more out to Foxconn there at least that is their recently stated intent. Although the Foxconn Made Sony I have is decent it has a Samsung VA panel not a Sony part .

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