Smaller Brands Rise in Electronics Market

SAN JOSE, Calif. (AP) _ Steve Forman is getting ready to join the flat-panel television craze. Lower-priced 42-inch models are top candidates. <br/><br/>But don't ask the 62-year-old retired engineer

Monday, February 27th 2006, 9:36 am

By: News On 6

SAN JOSE, Calif. (AP) _ Steve Forman is getting ready to join the flat-panel television craze. Lower-priced 42-inch models are top candidates.

But don't ask the 62-year-old retired engineer to name the brands: He can't remember them.

Like many consumers, Forman, the current owner of a Toshiba TV, has abandoned his former penchant to stick with well-known brands, reflecting an agnosticism that has empowered underdogs in electronics.

The major consumer electronics makers still dominate the market, but analysts say the collective presence of lesser-known brands for products ranging from TVs to computers has helped keep prices down while boosting product choices.

In some sectors, like LCD TVs, ``they are emerging as forces to reckon with,'' said iSuppli Corp. analyst Riddhi Patel.

At a heavily trafficked Costco store in Redwood City, gleaming high-definition TVs from household names like Panasonic, Pioneer and Sony share the shelf space with generally less expensive sets from less familiar Akai and Vizio.

At Amazon.com, a 32-inch Olevia flat-panel LCD TV was recently the No. 1 selling TV. The relatively unknown brand consistently ranks in Amazon's top TV vendor list, helped by positive customer reviews, according to Amazon officials.

``Twenty years ago, you couldn't create a consumer electronics brand this fast,'' said Vince Solitto, chief executive of Syntax-Brillian Corp., which introduced its first Olevia TV in 2004. ``The only reason we were able to do this was because of the Internet.''

The Tempe, Ariz.-based company started by selling its LCD TVs online only, at 20 to 30 percent below name-brand prices. Like other upstart electronics makers, Syntax-Brillian benefited from customer and media reviews posted online, while shopping-comparison sites and other Web outlets helped point consumers to good deals or new brands.

Now, Olevia TVs are also sold at two dozen retail chains, including Circuit City, Kmart and CompUSA.

In the holiday quarter of 2005, Syntax-Brillian was the eighth-largest seller of LCD TVs in the United States, according to iSuppli. At the same time, Vizio TVs made by Costa Mesa, Calif., newcomer V Inc. emerged from obscurity to rank No. 11, notching a 2 percent share, just under the much better known Toshiba Corp., which had 3 percent.

With their lower prices, Olevia and Vizio are nipping away as Sharp Corp. fights to hold onto its leading 13 percent share, with Sony Corp. on its tail and stiffening competition from such other makers as Royal Philips Electronics NV and Samsung Electronics Co.

The underdogs' market gains are considerable feats, analysts say, since the brands were nonexistent a few years ago and are now competing against an estimated 60 TV makers.

But flat-panel televisions marked a frontier in the new millennium, up for grabs for electronics behemoths and newcomers alike. No one has a long track record yet in plasma or LCD TVs.

And many electronics makers often get core components from the same big-name panel makers, like Samsung and LG Philips LCD Co. or a variety of Taiwanese manufacturers.

Using the same suppliers doesn't mean product quality is the same across the board. Some companies, and especially deep-pocketed vendors, invest in other components and proprietary technologies that could make differences in features, reliability and picture quality, analysts say.

The question, however, has become how much extra consumers are willing to pay for the difference in quality or brand reassurance. Recent surveys show consumers often name price over brand as their main buying criterion in electronics, said Forrester Research analyst Ted Schadler.

Forman, for instance, says he doesn't want to spend more than $2,000 on a 42-inch flat-panel TV.

``I don't have a good way of judging quality or long-term reliability, so I'm looking at all brands,'' he said. ``And nowadays I believe that most companies have got the quality and technology up to a good level or they wouldn't be in business.''

Consumers are also putting more faith in retailers, which would rather not carry expensive televisions or computers that are unreliable, since those could become customer-service liabilities, Current Analysis analyst Sam Bhavnani said.

At the same time, there are simply more retailers latching onto electronics.

When Office Depot Inc. approached Syntax-Brillian last fall to stock up for holiday shoppers, Solitto was surprised a place that sold staplers would want TVs. But he was more than happy to comply.

Five years ago, Taiwan-based Acer Inc. was one of the faceless manufacturers for top-tier computer companies. But after starting its own line of products, Acer now competes head-on with some of its former customers.

The computer maker strives to run the leanest possible operation so it can offer low prices and still profit. It has a skeleton sales force and avoids expensive marketing methods like rebates that draw customers but require extra overhead.

``Just having a simple, everyday low price works for us,'' said Maarten de Haas, Acer's vice president of product management and marketing.

The strategy is paying off.

In the fourth quarter of 2005, Acer sold 7 percent of computer notebooks in the U.S. retail market, stealing share from retail stalwarts Toshiba and Hewlett-Packard Co., according to Current Analysis. With its strength in Europe and the Middle East, Acer now ranks as the world's fourth-largest PC maker and is climbing in the U.S., where it is eighth, according to market researcher IDC.

Syntax-Brillian's tight focus on TVs similarly lends to its success, Solitto said.

``We're not marketing a lifestyle,'' Solitto said. ``We're not selling everything from MP3 players to refrigerators.''

Indeed, electronics titans like Sony and Samsung spend millions in marketing and research across a wide swath of cutting-edge technologies.

That's necessary for Sony to compete against its core, big-name rivals, said Randy Waynick, a Sony senior vice president. Waynick insists Sony isn't looking to compete on price against the lesser-known brands.

``There's always a place for a good, better, best story, and sometimes, it's a cheap, good and a best,'' Waynick said.

It's up to consumers to decide what works for them. And there's certainly no shortage of options now, Patel said: ``Consumers have brand choices at each price level.''