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Beta vs VHS (was Re: Beyond Ontologies)

• To: "Roger L. Costello" <costello@m...>
• Subject: Beta vs VHS (was Re: Beyond Ontologies)
• From: Jim Ancona <jim@a...>
• Date: Tue, 30 Sep 2003 13:30:05 -0400
• Cc: xml-dev@l...
• In-reply-to: <3F794846.74F48320@m...>
• References: <15725CF6AFE2F34DB8A5B4770B7334EE03F9ECFD@h...> <3F794846.74F48320@m...>
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Roger L. Costello wrote:
> From what I have read, a characteristic of complex systems is that small
> changes/differences are magnified.  They even have a name for this
> characteristic - the Butterfly Effect
> 
> Butterfly Effect - a butterfly stirring the air today in Peking can
> transform storm systems next month in New York.
> 
> Beta vs VHS
> 
> An example of the Butterfly Effect in the economy is shown with Beta
> versus VHS videotapes.  A small difference in the initial user-base (in
> favor of VHS) resulted in an avalanche of people purchasing VHS machines
> (despite Beta being technically superior).  Thus, a small difference was
> greatly magnified.

The archtypical Beta vs VHS story ("Beta was technically superior, but
lost out for <some non-technical or random reason>.") doesn't match what 
really happened. Sony was first to market, had a larger user-base and a 
virtual monopoly on prerecorded programming. But VHS was first with a 
two hour tape, which could record an entire movie unattended. That 
techical advantage and the consumer benefit it provided was what turned 
the tide to VHS.[1]

So I don't think the (real) Beta vs VHS story is a good example of the 
Butterfly Effect in the economy. In seems more like an example where 
consumer choice magnified by the Network Effect[2] leads to a stable 
situation with only one dominant technology. We've certainly seen plenty 
of similar cases over the past couple of decades. I expect that if the 
experiment were re-run multiple with similar initial conditions, the 
outcome would be the same (which is not what you'd expect if the 
Butterfly Effect was involved).

Jim

[1] - http://www.guardian.co.uk/online/comment/story/0,12449,881780,00.html

[2] - http://www.wikipedia.org/wiki/Network_effect

• References:
  • RE: Beyond Ontologies
    • From: "Bullard, Claude L (Len)" <clbullar@i...>
  • Re: Beyond Ontologies
    • From: "Roger L. Costello" <costello@m...>

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