As Pete Putman reported in Display Daily on Monday, Pioneer has finally accepted the inevitable and is dropping out of the flat-panel TV business. But that’s not all. Vizio has all but dropped out of the plasma club, too, as Eric A. Taub reported in the New York Times last week.

Ken Werner
Senior Analyst and Editor

Although four plasma models still appear on Vizio’s website as I write this, the company has all but exhausted its existing inventory, said company co-founder Laynie Newsome. No plasma sets were shown in Vizio’s suite at CES this year — which featured LCD-TVs exclusively — a striking change from the previous year, when PDP-TVs from 32 to 50 inches were prominently displayed.

Vizio’s decision is ironic, because the company has been a major PDP-TV vendor, and a successful one. For all products, Vizio’s Q4 sell-through was 55% higher in 2008 than in 2007, and between November 25 and December 31 it was up 24%, Newsome said, a year-end strength that was not typical of the industry as a whole.

And plasma was a particular success for Vizio in 2008. The company’s Q2′08 PDP-TV business experienced a year-over-year growth of 225%, selling 240,000 units, and ranking Number 2, overtaking Samsung with a 25% market share, Vizio reported at the time. The company’s 32-inch VP322 PDP-TV model accounted for 18% of all PDP-TVs sold in that quarter, reported Tamaryn Pratt of Quixel Research.

In Q4, even with Vizio’s PDP sales lagging compared with the previous quarter, presumably because the company was selling off its inventory without replenishing it, the company ranked Number 3 in the market and posted sales that were 76% greater than in Q4′07. And, while industry-wide North American sales of LCD-TVs slipped from 8.9M units in Q4′07 to 8.7M in Q4′08, according to DisplaySearch, shipments of PDP-TVs increased by 28% on quarter and 10% on year. PDP-TVs shipped a total of 1.3M units in Q4 — a new record for quarterly shipments.

So, with plasma showing such strength, why did Vizio pull the plug? Vizio’s Lanie Newsome told Eric Taub that plasma sets simply don’t look as good on big-box selling floors, which are usually brightly and harshly lit. This gives customers the impression that LCD-TVs have a more exciting picture than plasma, even though they might well have the opposite impression if they viewed the set in their own home. The result is that LCD-TVs move off the shelves faster than plasma, Newsome said, and Vizio wanted to devote all of its available shelf space to the faster-moving technology.

This leaves two strong players in the North American PDP-TV market: Panasonic and Samsung. LGE has been losing money in the segment and is consolidating its efforts. And Vizio’s move won’t make the folks at LG any happier. LG was was Vizio’s primary plasma panel supplier.