10:31 am
Tue March 9, 2004

Better Product

Remember Betamax? Commentator Wally Bock does.

Wilmington, NC – [Click the LISTEN button to hear Wally's commentary.]

One of the enduring business myths is that the best product always conquers the market.

In this Postcard from the Digital Age, we're going to talk about two "great products" that never turned into commercial success.

Take the Betamax. It was the first home videocassette recorder. But you'd be hard pressed to find a Betamax machine today, except in a museum.

You'll hear that Sony's Betamax format lost out to the VHS format despite the fact that Beta was a far better product. That's almost right.

What the Beta format did offer was a better picture and better sound than the VHS format the finally became the standard. That mattered a lot to videophiles. The rest of us didn't seem to care that much.

We did care about convenience, though. What helped VHS win the war with Beta was longer playing time. If you put a movie on Beta videocassettes, it almost always required at least two cassettes. That meant carrying two, inserting them in proper order, changing the tape in the middle of the movie and then rewinding both cassettes.

That doesn't sound like much, but it was enough to make the VHS format seem a whole lot more convenient to most home users. The video rental stores preferred VHS, too.

Video rental stores liked the fact that they only had to stock a single tape for any movie they rented. That required less shelf space and less inventory.

Beta's better picture and sound didn't mean as much to consumers as convenience. They didn't mean as much to video rental stores as convenience and lower inventory cost. So, in the end, Beta wasn't a better product than VHS for consumers and for parts of the value chain.

For Betamax, what seemed to be the best product really wasn't. But the Macintosh computer really was a better product. Much better. It just never generated the kind of commercial success that it should have.

Return with us now to those thrilling days of yesteryear, because if you want to understand how much better the Mac was when it was introduced, you have to remember just how different the computers of the early 1980s were from today's.

In those days most computers had screens that showed you either green or amber letters and numbers. There were no pictures or icons.

You used a keyboard to type out commands for the computer to execute. There was no such thing as a mouse.

The Macintosh was the result of Apple founder Steve Jobs' visits to the Xerox R and D facility in Silicon Valley, called Xerox PARC. That's where he saw an experimental computer with a mouse and a graphical interface, something like what your computer probably has today.

He took what he'd seen back to Apple and used his energy, obsessiveness, and clout to develop a new computer for Apple that had a graphical interface and used a mouse. The first result was a machine called Lisa.

The Lisa was a great machine, but with a price tag of around $10,000 it was far too expensive for the mass market. So Jobs and Apple went back to the drawing board and came up with the Macintosh.

The Mac was introduced in 1984, the year of the memorable and never-seen-again-on-TV Super Bowl commercial. People may not have understood the commercial, but they loved the Macintosh computer.

The graphical interface and the mouse made the Mac far easier to use than anything else on the market. The operating system was rock-solid. It was a hit and it should have propelled Apple into the lead in the personal computer market.

Today, though, Apple PCs account for less then five percent of all PCs. What happened was something called management arrogance. Steve Jobs was so sure that he had a product that would always be the best on the market, that he refused to allow third parties to develop software for the Mac.

Soon there were far fewer programs available for the Mac than for Microsoft-based PCs. Apple began losing market share and almost didn't stop.

Beta missed the success boat by not understanding what really mattered to consumers. Apple got that right but missed the boat because they believed that one great product assured them of a market lead forever. Now, there's two mistakes you don't want to make.

[You can find more of Wally's articles at his Resource Web Site; www.bockinfo.com.]