Business History Review

Articles

Strategic Maneuvering and Mass-Market Dynamics: The Triumph of VHS over Beta

Michael A. Cusumanoa1, Yiorgos Mylonadisa2 and Richard S. Rosenblooma3

a1 Michael A. Cusumano is associate professor of management at the Sloan School of Management of the Massachusetts Institute of Technology.

a2 Yiorgos Mylonadis is assistant professor in the Department of Management at the Wharton School of the University of Pennsylvania.

a3 Richard S. Rosenbloom is David Sarnoff Professor of Business Administration at the Harvard Graduate School of Business Administration.

Abstract

This article deals with the diffusion and standardization rivalry between two similar but incompatible formats for home videocassette recorders (VCRs): the Betamax, introduced in 1975 by the Sony Corporation, and the VHS (Video Home System), introduced in 1976 by the Victor Company of Japan (Japan Victor or JVC). Despite being first to the home market, the Beta format fell behind the VHS in market share during 1978 and declined thereafter. By the end of the 1980s, Sony and its partners had ceased producing Beta models. This study analyzes the history of this rivalry and examines its context—a mass consumer market with a dynamic standardization process subject to “bandwagon” effects that took years to unfold and that were largely shaped by the strategic maneuvering of the VHS producers.

Michael A. Cusumano is associate professor of management at the Massachusetts Institute of Technology's Sloan School of Management, specializing in competitive strategy and the management of technology in Japanese firms. He graduated from Princeton University in 1976 and received a doctorate from Harvard University in 1984. He is fluent in Japanese and has lived and worked in Japan for six years. He held two Fulbright fellowships while studying at the University of Tokyo, Faculty of Economics, during 1980–83. In 1984–86, he was a postdoctoral fellow in Production and Operations Management at the Harvard Business School. In 1992 he was a visiting professor at Hitotsubashi University in Tokyo. He was written two books: The Japanese Automobile Industry: Technology and Management at Nissan and Toyota (1985) and Japan's Software Factories: A Challenge to U.S. Management (1991), as well as numerous articles on product development and manufacturing innovations in Japanese firms.

Yiorgos Mylonadis is the Douglas Vickers Term Assistant Professor of Management at the Wharton School of the University of Pennsylvania. He will receive his Ph.D. in management from the Massachusetts Institute of Technology in June 1993. He holds an M.A. in economics from the University of California, Los Angeles (1986), Ptychio in economics from the National and Capodistrian University of Athens (1985), and a B.A. in sociology from the American College in Greece (1984). His research interest lies in exploring the claim that organizations act as thinking entities in a variety of contexts: competitive analysis, technology strategy, and organizational failure. His current research project examines the response of industrial firms to the social concern for protecting the natural environment.

Richard S. Rosenbloom is the David Sarnoff Professor of Business Administration at the Harvard Graduate School of Business Administration, where he has taught courses on Competition and Strategy, the Management of Technology, Manufacturing Policy, and Operations Management. He has published widely on the management of technology and innovation and is the editor of an annual series, Research on Technological Innovation, Management and Policy, published by JAI Press. He is currently at work on a book on “The Future of Industrial Research.”