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Vizio reboots the PC: a quiet American success story takes on sleeping giants

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The keyboard had to change.

It was a month after Vizio had revealed its new line of PCs at CES 2012, where the company had received near-universal praise for its slim designs, clean Windows builds, and promises of low prices. But the keyboard was contentious: it looked striking but didn’t seem all that comfortable to use. After using the CES prototypes for weeks, Vizio’s team decided to change it up — not only the design of the keycaps, but the feel of the inner mechanism as well. “Are you sure?” asked the company’s manufacturing partner, which had already built the tooling and was gearing up for production. “You know what this means.”

They were sure. Oh, and while they were at it, they decided to make the trackpads bigger. Just to make things a little more complicated.

Sticky TOC engaged! Do not remove this!

Vizio is one of the best-kept secrets in consumer technology. The tiny Southern California company consistently sells the most HDTVs in America, but it's a sure bet that you know virtually nothing about it. Hell, most people don't even know Vizio is an American company, even though all but three of its 417 employees work in the US. That's sort of what happens when you run virtually no advertising outside of sponsoring a few major events like the Rose Bowl, hold no press conferences outside of CES, and build the foundation of your empire by selling low-cost TVs at Walmart. Yet Vizio's customers keep coming back, and bringing others: a combination of low prices, increasing quality, and solid customer support is pretty hard to resist.

But after conquering the TV market, launching a line of well-regarded soundbars, and dipping a curious toe into the Android tablet waters, Vizio's decided to come out of the shadows and go after something bigger: the PC industry. The company just announced a complete line of laptops and all-in-one desktops that feature attractive designs, high-end components, and totally clean builds of Windows, with prices between $899 and $1,299. It's a risky bet for many reasons — the PC is full of mature, dominant players like HP and Dell, and the entire PC ecosystem is at a major inflection point with Windows 8 and Windows RT — but Vizio is confident it's making the right move.

After all, it entered the mature TV market in much the same way almost exactly a decade ago.

“It's been a meteoric rise for the company.”
Finding Vizio

Finding Vizio

“We're not here to build cheap product, we're here to make
the product affordable.”
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Vizio's headquarters in Irvine, California is not particularly large or imposing: it's a nice office building in a nice office park by a nice freeway. About half the company works here in engineering, design, sales, and operations; another 226 tech support employees are located in a South Dakota call center. Inside, a small showroom for retail partners leads into the main floor, where the usual rows of open-workspace cubicles are interrupted at every turn by TVs of every possible size. One perk of working at a successful TV maker is apparently getting to pick a nice LED display to use as a second monitor.

“It's been a meteoric rise for the company — it's an insane place to work,” Vizio CTO Matt McRae tells me. “I wouldn't work anywhere else.”

Vizio was founded in 2002, two years after CEO William Wang survived the crash of Singapore Airlines Flight 006 — the pilots attempted to take off using the wrong runway and collided with construction equipment, killing 83 people. Wang took time to reflect and close down his other businesses, and then founded Vizio as a three-person company with just $600,000 — some of it raised by mortgaging his house. By 2007, the company had grown to 80 people and was booking $2 billion in revenue by selling TVs at Costco and Sam's Club. “We're here to make innovative technology a commodity,” Wang told Inc magazine at the time.“ We're not here to build cheap product, we're here to make the product affordable.”

“PCs aren't going away.”

Making that strategy work requires deep ties to Asian manufacturing: Taiwan's AmTran Technology owns 23 percent of Vizio, and the company maintains strong relationships with other major OEMs like Foxconn and Quanta. That means a lot of shuttling back and forth to China, especially as products are being developed — all those TV sizes means Vizio launches something like 70 new products a year, and McRae and his team take eight to ten trips to China a year to keep everything running smoothly and product introductions on schedule. But the PC launch is special: it's the first time Vizio has launched a product outside of CES. In fact, it's the first product launch event in company history.

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Vizio CTO Matt McRae

“PCs aren't going away,“ says McRae. “They're still extremely important devices in people's lives and they're really becoming an entertainment product as much as a productivity product. And if it's an entertainment device, it's in our wheelhouse. We do entertainment devices pretty well.” Vizio first tried to expand beyond TVs into smart devices with the Vizio Phone and Tablet, which launched at CES 2011, but McRae killed the phone after dealing with carriers proved frustrating and expensive. PCs and tablets can be sold directly to consumers — something Vizio is pretty good at.

“The tablet has forced the PC industry out of its slumber.”

McRae laughs when I ask why he's building traditional PCs instead of betting entirely on tablets or other post-PC devices. “People buy a tablet to replace their PC,” he says, “but within six weeks, they're carrying a laptop and a tablet in the same case. They end up carrying a second device.” That doesn't mean Vizio is giving up on its tablet product line — McRae says new Android tablets will come “over the next six months or so” — but the company sees a huge opportunity to attack as the PC market undergoes a rapid change. “The tablet has forced the PC industry out of its slumber. There wasn't much going on. But the next three to five years in PCs will actually be very interesting. You're going to see new form factors, you're going to see touch embedded over time. A lot of lines that used to be very bright between products — there's a tablet, there's a PC, and there's a TV — those lines are blurring.”

Viewed through that prism, it's actually Vizio's new laptops that seem like the outliers — the all-in-one desktops are really just nice small TVs with a PC permanently plugged into input 0. McRae calls all-in-ones the “fastest-growing form factor in PCs" and says Vizio's are“designed to be a great TV experience, not just a PC. We have 2 HDMI inputs, 2.1 audio, a beautiful 1080p screen.” The screens on the new PC line are a source of pride, of course. “We're an HDTV company, we care about picture quality,” says Matt.

“You can tell there was a motherboard designed first and then they wrapped plastic around it and shipped it as fast as they could.”

That's all very nice, of course, but the PC market is full of huge players who build every size and shape of machine imaginable — including, yes, some nice all-in-ones with HDMI inputs and 1080p screens. McRae is dismissive when I bring this up. “It's a huge market, granted, but it's packed with large elephants. That's exactly what the TV industry was eight years ago.” Matt's not the type to hold back. “There's not a lot of innovation” in PCs, he says. “At $599 and under, there's just tons of black plastic. It all looks the same. You can tell there was a motherboard designed first and then they wrapped plastic around it and shipped it as fast as they could.” His tone is calculated. “It's the same players pumping out the same product every six months. So that's ripe for disruption.”

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"Volume Management" by Cory Archangel 2011. Photo by Kyle Chayka.

And Vizio is aiming right for the heart of the mainstream with its PCs, pricing them in what McRae repeatedly calls out as a gap between the cheap sub-$600 machines and Apple at above $1,200. It's a gap Windows OEMs have struggled to address — at Computex, AMD's John Taylor flatly told our own Sean Hollister that PC sales volume “disappears by the time you get to $899, and then they all go to Apple.” That's right where Vizio is focused. “We're not even trying to compete with Apple,” says McRae. “The gap in the market is premium Windows consumers.”

McRae's actually quite complementary towards Apple, saying that the Cupertino company “deserves a lot of respect for bringing design back into the consumer's purchase decision.” But his goal is to bring that level of detail and care to a lower price point in a way that resonates with consumers. “We basically built a $2,000 PC for half the price — that's how we approached it,” says McRae. “We didn't skip on a single thing. Then we take our efficiency as a company and our supply chain to price it at a number you can't match.” That's Vizio's TV playbook, almost verbatim — and if history is any guide, established PC vendors should take notice.

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Clean lines, clean Windows

Clean lines, clean Windows

“I hate opening a PC and seeing stickers and flashing LEDs all over the place.”
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Once Vizio had made the decision to jump into the PC market, it assembled a small internal design team to lead the project. Really small: less than 10 people inside Vizio, although Matt estimates “well over 1,000” people worked on the project at suppliers around the world. The project was led by VP of design Scott McManigal, a former BMW designer who presides over a studio dominated by a wall of whiteboards and drawers full of abandoned prototypes. McManigal is California-friendly and clearly loves talking about his work, but there's a fundamental practicality to his approach that's evident in all of Vizio's designs.

“I can't say that the inspiration for this design came from a leaf we saw falling off a tree,” Scott tells me. “It was really a deep analysis of what existed in the market, plus where we really felt there was an opening.” In fact, McManigal decided to get as far away from nature-inspired designs as he could, in an attempt to differentiate Vizio's PCs. “There's a lot of product out there that's very organic, with kind of amorphous surfacing that attempts to look very thin — but it doesn't leave a strong feeling of making a statement,” says McManigal. Vizio's machines all look precise, with clean lines and sharply tapered edges. McManigal says the goals were to highlight “authenticity of materials” with the aluminum unibody and for the overall design to be “striking but not cluttered.”

McManigal also stressed total quality over design flourishes. Early designs for the laptops featured a small raised tab on the side of the lid that bent upwards to hold the Vizio logo and conceal a charging status LED underneath. It was a slick solution that also referenced design treatments on some of Vizio's other products. But ultimately McManigal decided that it wasn't worth the risk of potential manufacturing defects, since the tolerances were so tight. “There's multiple forming operations to have a piece of metal come up,” he says somewhat wistfully while holding a prototype. “We had to sacrifice it — it wasn't going to achieve the quality.” The team settled on a traditional V logo for the lid.

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Reducing clutter and increasing overall quality also meant fighting with Microsoft and Intel to keep the machines sticker-free. “I hate opening a PC and seeing stickers and flashing LEDs all over the place,” says McManigal. McRae was even more vehement: he spent hours arguing about the stickers, even putting together PowerPoints of forum posts and websites discussing the best ways to remove stickers from other Windows PCs. The fight paid off: Vizio's machines are totally clean apart from a small Windows emblem silkscreened on the bottom casing.

“Retailers charge $50 to clean an image that they themselves ruined.”

No one's saying what losing the stickers means for Vizio's participation in Microsoft and Intel's various marketing subsidy programs. While Vizio is officially calling these “ultrabooks,” Matt insists that “thin and light is more descriptive,” and says joint marketing with Intel is coming “in certain areas.” Vizio's trying to keep it simple, he says. “It's like our tablet was just called the Vizio Tablet. Don't waste money on marketing, just tell people what it is.”

The relentless focus on reducing clutter extended to the preloaded software on the PCs as well — or rather, the almost complete lack of preloaded software. “Something like 30 percent of people buy a PC and re-image it,” says McRae. “Retailers charge $50 to clean an image that they themselves ruined.” Just like the stickers, turning down crapware means Vizio is turning down money — preloading all those demos and offers generates significant revenue for traditional PC vendors. “We thought about it for 30 seconds,” says Matt. “It's easy to make a product that's clean when everything else is completely messed up. There's a big market in that crapware, but it's not worth it.”

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And it's not just an off-the-shelf stock build of Windows — Vizio embedded Microsoft engineers on its team to optimize Windows for its hardware. The result is that every Vizio PC will be a Microsoft Signature machine, running a specially tuned version of Windows 7 that Microsoft usually offers to regular PC owners for an extra $99. Microsoft will even provide tech support for Vizio's PCs on top of Vizio's own support, a second layer of reassurance for buyers wary of purchasing a machine from a new vendor.

What's interesting is that Microsoft has offered the Signature program for about a year, but it hasn't seen much interest from consumers or PC makers. Matt says it was a “perfect idea, but it fell on deaf ears.” He's blunt about it. “Microsoft made this great commitment to a great image, and they have a vested interest in making sure people are having the best experience,” he tells me. “It drives them nuts that OEMs throw a bunch of other stuff on it and then people blame Windows for performance problems.”

Preloading stock Windows isn't a permanent advantage, of course, and Matt thinks Vizio is about to kick off a trend. “My guess is that you might see some people follow us when they realize how consumers really feel about a clean image,” he says. What he doesn't say is that it might be hard to match Vizio's pricing without taking sticker and crapware money — hard because Vizio has years of supply chain and operational experience building, distributing, and selling TVs at lower prices than its huge competitors.

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Touch and go

Touch and go

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Of course, all of this effort is for naught if Vizio's PCs are unpleasant to use. And while other vendors might have fallen victim to the temptations of stickers and bloatware, they have years of experience building keyboards and trackpads — the first and most important part of any user's PC experience. Just ask any ThinkPad owner: PC users buy and stay loyal to brands and machines for years because of keyboards. McManigal showed me a drawer full of keyboards, both from Vizio and competitors. “It's your primary interface with the computer and at the end of the day that's what matters.” And PC trackpads are so notoriously awful that there have been several pieces over the past few years wondering when and if they might ever improve. Success isn't a guarantee, especially if you're new to the game.

But the keyboard is too important to be blended away

And so it was inevitable: Vizo's first shot at a PC keyboard design missed the mark. Debuting at CES, it was immediately distinctive in a world dominated by chiclet-style keyboards, but the keys appeared to be enormous and typing on it felt somewhat strange. I called it out right away as the biggest question mark for the machines, but McRae told me at the time that the company was doing extensive testing to make sure the design worked.

It didn't. In reality, the CES prototypes were the first machines with functional keyboards Vizio had made — previous mockups had fake keyboards with immovable keys. McManigal says the goal had been to blend the keyboard into the surface and emphasize the screen as much as possible, which is what you'd expect from a team used to building TVs. But the keyboard is too important to be blended away, and the team found the lack of visual and physical separation between the keys made typing difficult. “It's one thing to have a sample made, or print it out on a piece of paper and rapid prototype,” says McManigal. “But it's another thing to get the tactile feedback. It's not until you start using it.”

Vizio decided to change two things about the keys: their visual design and their travel. Changing the visual design turned out to be easier than expected — McManigal first tried some more traditional designs, but none of them fit Vizio's aesthetic. “You're greeted with these curvaceous keys in what's otherwise what's a very crisp geometric design, it looked like something had been taken and slapped in.” Ultimately he just just added a small chamfer to each of the existing keys. “We cut into the edge and opened up the space between the keys, and typing proficiency shot through the roof,” says McRae.

The hard part was adding travel, especially since the tooling was already made. McManigal wanted “a little snappier feeling,” which required a new mechanism. “It was more of a mechanical and timing challenge” than a design problem, he tells me. He told Vizio's manufacturing partner that the keys were changing during a trip to Taiwan. “There was a lot of 'Are you sure? You know what this means.'”

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The trackpad was a major focus from the start, especially since the company decided to ship a trackpad as standard with the desktops as well. “We spoke about Windows 8 and the ability to integrate touch,” says McManigal. “It was actually a conscious decision we made to not design a mouse.” That meant the company's trackpads had to perform at a high level, since trackpads on the desktop are still a rarity.

“Trackpads have sucked for a really long time.”

McRae is more blunt, as usual. “Trackpads have sucked for a really long time,” he says. “We wanted to get it right.” The machines I saw at CES had finicky pre-production trackpads, but McRae says the company has spent the past six months polishing the drivers and performance. “You have to realize that it's a pain point to consumers, it just drives them nuts. It drives returns, it drives a bad experience.”

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McRae wouldn't tell me who's supplying Vizio's trackpads other than to say it's “the top sensor in the marketplace,” but the part itself is custom, both in size and shape. We've since discovered that Sentilic is responsible. Microsoft also came in to help tune the drivers and refine the experience. “I could go for six hours on all of the vulgar details of making a good trackpad.” McRae tells me. Then he starts talking about palm and thumb rejection in extreme detail. It's clear he's been thinking about this a lot.

Vizio had wanted a larger trackpad at first, but designed the CES prototypes with a smaller unit because things were moving so quickly. After using the CES machines for a few weeks, the team realized that its initial instincts were correct — the trackpad needed to be larger. “It's just one of those things that made us go back to the drawing board even though we had discussed a larger touchpad earlier on,” says McManigal. “What sometimes seems like a simple change is never simple.”

Unfortunately, I wasn't able to try out the newest trackpad and software — the units I saw were still running pre-production drivers, and their trackpad performance was distinctly uneven. Vizio promises that the final versions are near-perfect — and if McRae and his team have really pulled it off, these PCs will instantly distinguish themselves as some of the best on the market for their trackpads alone.

Running with Microsoft

Running with Microsoft

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Although Vizio's launch lineup of PCs seems tailor-made for Windows 7, the company has been thinking hard about Windows 8 as well. McRae says the goal was to get products out at the same time as Intel's Ivy Bridge launch, but that all the machines were designed and tested with Windows 8 in mind. “We've got tons of machines in the back all running Windows 8,” he says. “You'll see us refresh the line when Windows 8 comes out and we'll have new products next year, but these will be first class Windows 8 machines when people upgrade them.” McRae also says that Windows 8 will unlock some additional features on the current PCs, including what he'll only describe as a “pseudo-touch interface that's pretty neat — a bit of an Easter egg.” I have no idea what that means, but when I ask McManigal about touch on Windows 8 he begins to mention the large size of the trackpad and then stops. “I don't want to give away too much.”

And what about Windows RT and ARM-based devices? McRae's open to them, but it has to make sense. “We don't think think it's a 10-inch tablet that you throw on the desk and say it has Windows 8 — that's not enough thought put into it.” Matt's dismissive of the idea that Windows RT devices will compete with Android tablets, but he's particularly interested in Windows 8's ability to serve as both a content consumption device and then also serve as primary laptop. “That's pretty unique positioning, but I think it requires a different way to design the product.”

“How can we cannibalize our own business?”

Those designs might get really wild — when I ask Matt if he's worried about the PCs cannibalizing his small TV business, he looks at me like I'm missing the point. “ How can we cannibalize our own business?” he asks, only a little seriously. “ One of the reasons we think tablets are really important is they can eat more into small-size TVs than they can powerful laptops.” It's an idea that comes up several times as we talk, actually. “What's the difference between a tablet and a small size smart TV? A battery and a touch interface. If I made a 65-inch tablet it would look like the TV sitting behind me. You're going to have fast ARM processors, they're both going to be running Linux, you're going to get access to Netflix.” It's not hard to imagine Vizio blending its Windows RT PC and TV lines down the road, especially if the TV content industry begins to change as much as we all hope it does.

But that doesn't mean Vizio is throwing away its Android tablets — in fact, Matt says they'll be refreshed within six months, and says the company might build a stock Android tablet. “When we came out with our first tablet we were on Gingerbread, and Gingerbread on a tablet was... suboptimal, to put it politely.” That's obviously not the case with Ice Cream Sandwich, so Vizio's skin isn't necessarily required anymore. “We're not going to do a skin if we don't have to. If it's not providing value, you ditch it. Whatever is right for the consumer.”

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Vizio's Frontline

The last piece of the puzzle is actually selling these things to people. And Vizio is pretty good at that; McRae calls Walmart and stores like Sam's Club and Costco “a machine on helping us reach every consumer that we can.” Walmart will be especially important to the success of the PC line; the retail giant smells blood in the water as Best Buy flounders and is ramping up its electronics department. “That matches us perfectly,” says McRae. He shows me a full-size mockup of a sleek white store-within-a-store for Vizios PCs that will be in hundreds of Walmarts by the holidays. “We like to create great technology and sell boatloads of of it to every consumer who wants it.”

Vizio's also planning to do some more work getting itself known to consumers. McRae wants as many people to see the PC line as possible, and he says that pop-up shops focused on building brand awareness will appear around the country soon. “We've got to take it on the road,” he says. “You'll see us do some more in-your-face marketing.”

Vizio also plans to build specific awareness of these PCs as distinct products — McRae doesn't want to dilute his message by churning out dozens of new models every three months like his bigger competitors. “We're going to stick to a few products and we're going to do them really well, instead of throwing stuff at the wall and seeing what sticks,” he says. “We spent two years building these and getting it right. We'll do the config bumps and add features but you're not going to see us come out with new industrial design every three months. If you get something right you can stick with it for a while.”

Tempting mature markets

Tempting mature markets

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Vizio VP of Design Scott McManigal

It's not at all certain that Vizio will have any impact on the PC market: lots of consumers are satisfied buying $499 laptops with middling specs and tons of crapware, and even more are happily turning to the iPad as an adequate mobile computer with a huge ecosystem of apps and accessories. And Windows 8 is about to arrive and turn the entire concept of a PC on its head.

Vizio says it's prepared for Windows 8, but in many ways the company has created the ultimate expression of a traditional Windows PC: software from Microsoft and hardware from a collection of high-end suppliers, all put together by a skilled systems integrator with a sharp focus on the consumer experience. That's a pretty good place to be: the PC market might be changing dramatically, but it's not dead yet — and it's hard to ignore the huge number of people who want to buy a PC that feels like it was put together by people who care. There's a reason our review of the MacBook Air as a Windows machine is one of the most popular we've ever done.

At the same time, there's a chance that people will simply wait for the next generation of Windows machines — new-wave ultrabooks with touchscreens, or Windows RT tablets that run on ARM processors and compete directly with the iPad. And let's not forget enormous competitors like HP and Dell, who are a bottle of Goo Gone and a stock Windows installation disc away from wiping out Vizio's biggest differentiators. They're not going to sit by while a 400-person California company tries to walk away with the consumer PC market.

Matt McRae doesn't seem afraid of any of this. “Don't avoid the mature markets,” he says. “Sometimes those are the easiest to disrupt because everyone is asleep.”

Let's just hope that trackpad is as good as he says it's going to be.

The result

The result

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Sometimes, it all works out. Other times... One month after we published this story, we bought a Vizio laptop to try: a top-of-the-line $1,249 Vizio 15.6-inch Thin + Light, model CT15-A02, with a Core i7 processor and a 256GB solid state drive. You can read our full review here to see how Vizio's keyboard, trackpad, and clean software strategy performed in the final product.

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