Intel Investment Backs HDTV Research at Viewsonic
By ANDREW SIMONS
Orange County Business Journal
ViewSonic Corp. is counting on a high-profile partner and a low-cost computer part to better its prospects.
The Walnut-based company has big plans for a second investment from Intel Capital, chipmaker Intel Corp.’s venture capital arm. The amount is believed to be of several million dollars, but less than $10 million.
The money will help Viewsonic develop a chipset that could lower the cost of pricey high definition TVs.
Intel and ViewSonic are researching the new chipset, a group of chips performing a specific function in an electronic device, that can reflect light signals to a much higher intensity than today’s chipsets.
The company’s chipset, cheaper than technology used in current high definition TVs, could reduce the cost of digital sets, according to James Chu, ViewSonic’s founder and chief executive. The result, he said, could be prices lower than the $1,200 to $6,000 HDTV retails for now.
“We can make them at a very low cost,” Chu said. “We believe we can do it three years from now.”
High definition digital televisions have wider pictures, higher resolution and better audio quality than analog sets. Congress has mandated that the TV industry be fully digital by 2006, though many observers doubt the deadline will be met because of the cost to stations of converting to digital and slow sales of the sets.
If it takes off it could still be a lucrative market for ViewSonic, which has branched out into new areas as sales and profitability of cathode-ray monitors have eased.
Waiting for conversion
“One thing they’ll do is look around and see what else is out there,” said Stephen Baker, senior research analyst for Port Washington, N.Y.-based market tracker NPD Group Inc. “They’re going to see if there’s any piece of their business they can migrate to other businesses.”
For now, though, high definition is off to a slow start. More than 148,000 digital sets were sold in March, according to Arlington, Va.-based Consumer Electronics Association, just a sliver of the roughly 22 million sets sold in the U.S. each year.
The number of digital TVs sold is expected to grow an average of 75 percent a year for the next six years, according to the Association.
“Manufacturers continue to introduce a wide variety of new products, including HDTV sets retailing for under $2,000,” said Gary Shapiro, the association’s president.
Stuck between a slowing demand for computer monitors and an as-yet unrealized HDTV market, ViewSonic has still been able to boost sales.
Revenues at the privately held company have grown by more than $400 million in the last three years, reaching $1.4 billion in 2001, compared to about $940 million in 1999. ViewSonic employs about 400 people in Walnut.
With a 5.6 percent share of the U.S. monitor market, according to NPD Group, ViewSonic ranks eighth behind Compaq Computer Corp., Hewlett-Packard Co. and Sony Corp. Other rivals include Santa Ana-based Princeton Graphic Systems Inc., which, like ViewSonic, designs monitors and contracts out for production.
ViewSonic still faces hurdles before it sees its investment in high-definition rewarded.
Few programs are broadcast in digital format, and there is the risk that HDTV will not catch on as the forecasters expect. The Federal Communications Commission said recently that only a quarter of U.S. stations met a May 1 deadline to begin transmitting high-definition TV signals.
That doesn’t discourage Chu, who believes digital TVs will sell themselves.
“It’s just like when color TVs came out,” Chu said. “You saw color TV and never went back to black and white. It’s the same here. When people see high-definition TV, they’ll probably want to change.”
For now, ViewSonic is making short-term upgrades to its monitor line.
Chu said the variety of uses for personal computers should keep the lucrative display business rolling in the next few years.
“Displays will be more important in the future,” Chu said. “When resolution goes up, the picture gets very detailed. If you are a serious game player, today’s resolutions are too low. When you have a fine resolution visually, there’s a lot of difference.”
ViewSonic’s sales pattern is a testament to how important the company’s displays are to computer users. About 80 percent of ViewSonic’s sales are to people looking only for a monitor, compared to 20 percent that are sold bundled with a computer.