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Blogosophical Investigations
Sunday, September 29, 2002  

VHS v Betamax

It's a constantly made objection to the free market that large companies can force inferior products onto consumers just by using the power of their size and the benefits of economies of scale. VHS won over Betamax when, it’s said, there was either nothing to choose between the systems or Betamax was actually better. The QWERTY keyboard, an attempt to speed up the primitive mechanical typewriters, has become so entrenched that it can’t now be replaced by supposedly better ones, such as the Dvorak layout. Windows rules the world when the superior Mac OS deserves that place. And so on.

The hidden implication is, of course, that intervention by expert planners and benevolent governments to correct these ‘market failures’ will improve our lot.

But ‘market power’ implies that the consumer is getting products at low prices - which is good. And anyway, it’s hard to find cases where one product is objectively better than another - what’s better for one group of consumers isn’t better for others.

There’s a lot that could be said on this (for example, that there’s no question of a buyer having a right to a product at any price other than the one that the producer chooses to set) – but I’m interested right now in the fact that the supposed defeat of superior products by inferior ones is usually a myth. On ‘QWERTY’ v. ‘Dvorak’, try this Reason article – and for criticism see here.

Here’s another case. The interesting information below was posted by Rolf Brunsting, of Darp in the Netherlands, in EPOC Digest no. 83 of September 29 - EPOC Digest is a discussion list for Psion PDA users. (Rolf is not responsible for any other opinions expressed here.)

I'm inclined to say that VHS was the better product. Sony (Betamax) and Philips (V2000) had the idea that people would mainly record television programs. While most people actually rented pre-recorded movies and other material from a video rental store. The design and engineering behind the Betamax and V2000 systems to get a better quality recording didn't give the consumer a better picture for pre-recorded tapes. The additional expense of Betamax and V2000 machines didn't pay. That both Sony and Philips discouraged the release of adult material and the more violent horror movies didn't help either.

In other words, Betamax and V2000 didn't give the consumer what (s)he wanted and failed as consumer products.

Very interesting.

In fact, it’s often hard to find different products that do exactly the same job. There’s an old story about a businessman testing an advertising executive’s prowess by slamming down two 50-pence coins and demanding “I’m the customer. Convince me that I should prefer that one to this one!”

But producers are never competing to offer identical products. There’s always some difference. Sometimes that difference is just a few pennies difference in price, or easier availability in the shops. Often it’s more substantial.

11:22 AM

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