Sony Betamax failure By Ehab Abusabha

Sony Betamax 1975- 2002

History of Sony:

The VISION: to give shape to the future, The COMMITMENT: to create new technologies, The INSPIRATION: to fashion a new lifestyle, The CONVICTION: to launch the digital era, The COURAGE: to achieve the digital dream.

SONY. DOING WHAT OTHERS HAVE NOT.
1- How It All Began
In a burnt-out department store in Tokyo in May 1946 just after World War II, Masaru Ibuka and Akio Morita founded Tokyo Tsushin Kogyo (Tokyo Telecommunications Engineering Company), with the aim of developing products and technologies

In 1950, Ibuka and Morita created Sony’s first hardware device: a tape player/recorder called the G-TYPE recorder. Materials were in such high demand that the first tapes were made of paper with hand painted magnetic material applied by Sony’s first engineers.
In 1953, the company earned licensing rights to the transistor from Western Electric.
In January 1958, the company name was subsequently changed to Sony Corporation. In 1955 they introduce electric rice cooker, followed by Betamax in (1975) , Trinitron color television (1968); Walkman personal stereo (1979); Compact Disc player (1982) ; Betacam for broadcast use (1982); Floppy Disk (1983); Handycam (1985); MiniDisc (1992); PlayStation (1994); DVD (1997); Memory Stick (1998); AIBO (1999); PlayStation 2 (2000) and CLIE, Sony's personal entertainment organiser (2000)

2- Betamax

During the 1970s, Sony developed a machine designed to deliver home video-taping equipment. The machine used Betamax technology, and hit the stores in 1975. In its first year, 30,000 Betamax video recorders (or VCRs) were sold in the United States alone. But a year later Sony’s rival JVC came out with the VHS – short for ‘video home system format VCR.
By January 1977, there were four more Japanese electronics companies manufacturing and marketing VHS-based machines.
At the same time only Sony manufacturing Betamax which has tape quality superior to its rival at that time consumers were forced to decide between them, from 1981 onwards Betamax-based machines were rapidly losing popular favor and owners were becoming increasingly aware of one serious failing. Whereas VHS machines could record for a considerable length of time, Betamax machines could only record for one hour (football matches couldn’t be recorded)
Actually, Sony focus on enhancing sound and picture quality (took as many as three cassettes to show an entire movie) , This caused frustration both among video owners, who had to swap tapes over, at same time VHS succeed was that you could get a whole movie on a tape and consumer came to know that VHS delivered value on a dimension that mattered to consumers which lead to Sony lost market share but the number of units sold still continued to rise in 1984 with peaking of global sales of 2.3 million units, three years after in 1987 VHS had gone way beyond the tipping point with a 95 per cent share of the market.
On 22 August 2002 Sony finally announced it would be discontinuing Betamax products
And they introduce the first Sony VHS player at the same time of this announcement, now, of course, VHS itself is under threat from the rapid rise in digital versatile disc (DVD) players.

3- The reasons of Sony Betamax failure
The reasons of failure will be explained from two points of view:

3-1-The Market Researchers View:
• Sony researchers focused during their research only on what the market need not the customers need which explain the failure by Sony to appreciate the advantage in consumers' minds of extended taping time versus reduced tape.
• Sony refused to license its format or technology with other companies which will directly affects the win or loss risks.
• Betamax VS VHS: in 1976 Matsushita developed new product called VHS which is bigger in the size, Shared by 4 companies, Had extra features & less in price.
• in 1979, Universal Studios and Disney took legal action against Sony, claiming VCRs were infringing the copyrights of movie producers.
• Sony researchers do not segment their market, but they used the mass marketing strategy.
• There were no plans to collect customer’s feedback to do the necessary modifications needed on their product.
• MRs has no alternatives plans to cover the risk of loss such as they can develop the VHS to create new product (Super VHS) to help establishing a broadcast-quality picture(which is better in Sony-Beta) also as a new standard home video format.

Marketing Mix Element Sony
Product Product technology did not meet consumers’ needs
- Could only record for one hour
- Superior band width and resolution (opportunity for differentiation) but viewers couldn’t perceive a difference
Price - Skimming strategy conflicts with mass market approach
Promotion - Pitched the product to the mass market
- Did not promote product’s superior features to back-up technophiles
Distribution - Missed prerecorded tape distribution (very important to VCR owners)

Refused license to Hitachi
Targeting - Did not target early adopter categories; focus was on the mass market
Timing of market entry - Commitments to production of U-Matic design delayed entry to home market for VCRs
- Refused to delay entry to establish relations with Matsushita

3-2- Our Opinion:

• Sony failed to recognize that many consumers buy such items on impulse.
• Sony sells back on word of mouth advertising.
• Sony competitors (Toshiba-NEC-Sanyo-Zenith-Radio Shack & Aiwa) also sell back; this was a painful for Sony because it’s the only company, which produced Beta VCRs in the decline period of sales.
• Users & video shop owners where more likely to buy VHSs because to its recording time (2-6) hours which allowed them to store a full movie in one cassette, Saving shelf space, No need to arrange extra cassettes or to follow the recording timing when they need to record un attended movie or to copy it.


4- Sony from Failure to success:

All market indicators are showing that Sony has:
• Redefine the problem.
• Analyze it, by take a close look at the causes. And they know now what consumer want.
• Depersonalize it. While Sony must analyze their mistakes, you won't learn anything if you're too busy beating up on yourself.
• Change it. OK, they now know what went wrong. And change their Product strategy.
• Get over it. Sony has Move on, they start manufacturing VHS player,

5- Lessons from Betamax

1- Don’t go alone. ‘Contrary to popular belief, what would help every category pioneer is competition,’ says Al Ries. True, providing the competition isn’t pushing a format incompatible with your own.
2- Let others in. Whether Sony refused to license its format or not, there is no question that the company would have had a better chance if its rivals had adopted Betamax.
3- Cut your losses. Sony’s decision to ignore VHS until 1987 was, with hindsight, an undeniable mistake.
4- Supply equals demand. When the manufacturers of pre-recorded tapes decreased their supply of Beta format tapes, demand for Sony’s Betamax recorders inevitably waned