Why VHS was better than Betamax

Read this, and the next time someone tells you that, of course, Betamax was superior to VHS, you can tell them that they are wrong. It's an urban myth.

This is not news: the information has always been available to anyone who could be bothered to look. However, it seems to me that the survival of this and many similar notions is not just a matter of techno-arrogance: it shows a failure to understand how technology markets work.

In 1985, a journalist showed me an article he had written about the IBM PC. I went through the introductory paragraphs step by step and explained that, as a matter of fact, every single point was wrong. "Oh well," he said, "that doesn't matter. That's what everybody thinks".

That and similar experiences as an ordinary reader led me, eventually, to two conclusions. The first is that a lot of comment is based on a sort of received wisdom, a common currency, that appears to be picked up from the atmosphere. It certainly isn't based on reality. The second is that almost no journalists, and no geeks, have ever come across the concept of "the whole product", though it is well known to marketing people. Real people may not be aware of it, but the "whole product" model is an accurate description of the way they buy things.

Let's take a simple example: digital audio tape (DAT). Get someone to compare DAT with a humble C90 compact cassette and they will find DAT to be technologically superior, especially for recording music. However, if you consider "the whole product", DAT is vastly inferior for most people most of the time. This is why people still buy millions of cassettes, while DAT has virtually disappeared from consumer use.

The point is that when someone buys and uses a product, the technological aspects are a small and often uninteresting part of the decision. When you choose compact cassette, you are also buying into a vast infrastructure of capabilities, services and support. These include the availability of cheap cassettes on every high street, cheap personal stereos, and the ability to use the same format for a wide range of applications (personal stereo, portable radio/cassette players, in the car, in your hi-fi stack).

You are buying the ability to stick a cassette in the post to your relatives in Australia with 100% certainty that they will be able to play it - and what's more, you won't care about never getting that tape back.

Similarly, when someone buys a Wintel PC, they are buying the ability to choose from dozens of models from hundreds of hardware suppliers, or have one built to order, or build one themselves. They are buying the ability to access hundreds of peripherals, hundreds of thousands of applications, and millions of websites that work best with their system.

They are buying the choice of hundreds of magazines, thousands of books, and all the supporting services from educational courses to repair shops.

They are also buying the confidence that their system will keep progressing even if individual manufacturers fail.

In marketing terms, "the core product" - such as a car, a computer, or a video recorder - is just the start. You have to add on all the things like reliability, service and support (the expected product), its expansion capabilities (the augmented product), and its potential for future development (the potential product) to get "the whole product".

Since real people make real buying decisions based on "the whole product" (and if they didn't, we'd change the model), simpleminded comparisons of products by technological feature are very likely to get it wrong.

I've been operating with the concept of "the whole product" for about a decade. It's much older than that, of course, but I first discovered it in Geoffrey Moore's book, Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customers, published in 1991. That and Moore's follow up - Inside the Tornado: Marketing Strategies from Silicon Valley's Cutting Edge - are the two most important books ever written about hi-tech marketing. In the Valley, in the 90s, they were used as bibles.

It had a strong effect on me. When you get a new tool, you want to apply it, and I applied it. I'd spent half a decade deriding Microsoft Windows - as a user, I'd preferred Digital Research's Gem, and I was a keen supporter of open systems Unix - but it didn't take me long to work out that Windows had won.

"The whole product" model also provided a convincing explanation of why VHS had thrashed Betamax. VHS offered a bigger choice of hardware at lower cost, the tapes were cheaper and more easily available, there were a lot more movies to rent, and so on. All of this matched my own experience.

I remember perambulating Hammersmith (doing the Maplin run) and finding VHS recorders more readily available to rent, while the video shop had three walls of VHS movies and only one for Betamax.

Indeed, the main thing that didn't fit was the idea was that Betamax was "technically superior". Standing in a shop at the time, there was absolutely no visible difference in picture quality, and some reviews had found that VHS's quality was superior.

I "knew" Betamax was superior -- that was the received wisdom, even at the time - and maybe it was, in a lab. But I wasn't buying a lab test rig. In terms of "the whole product", VHS was clearly superior, so that's the way I went. Along with everybody else.

Later I found out that Betamax had owned the market, but lost it because Sony got one simple decision wrong. It chose to make smaller, neater tapes that lasted for an hour, whereas the VHS manufacturers used basically the same technology with a bulkier tape that lasted two hours. Instead of poring over the sound and picture quality, reviewers could simply have taken the systems home. Their spouses/children/grandparents and everybody else would quickly have told them the truth. "We're going out tonight and I want to record a movie. That Betamax tape is useless: it isn't long enough. Get rid of it."

Betamax was the first successful consumer video format, and at one time it had close to 100% of the market. All of the video machines in use and all of the pre-recorded movies were Betamax. It had a de facto monopoly, and an element of lock-in (because of tape incompatibilities). It lost because, at the time, it could not do what consumers wanted: record a whole movie unattended. And although Betamax playing times were extended, they never caught up with VHS.

Other elements of the oft-repeated Betamax story are also wrong. For example, while Sony was certainly slow to bring in other manufacturers, it had tried to license it to rivals such as JVC before VHS was even launched. Betamax was not generally more expensive: Sony had to slash its original high prices but generally it was competitive. Indeed, after it had lost the market, Betamax machines were often cheaper than VHS ones.

And at the beginning, there was no comparative shortage of Betamax movies to rent: actually, they were all Betamax. (Stan Liebowitz, Professor and Associate Dean of the School of Management, University of Texas at Dallas, has done most research on this.

Even if Betamax had been "technically superior", it wouldn't have mattered. VHS users have long had the chance to upgrade to the compatible Super VHS format with superior picture quality. But rather than demanding better pictures for today's TV sets, consumers have shown more interest in LP (Long Play) modes that reduce the picture quality to provide longer recording times.

VHS won because "the whole product" did what people wanted at a price they were willing to pay. And when people use the VHS v Beta analogy, they are not indicating a market failure but their own ignorance.