Fundamentals of Business

Dominant standards thrive for decades

Once a dominant standard emerges, technical improvements to non-standard alternatives are largely irrelevant as far as the market is concerned. This fact has been demonstrated time and again, as the following three examples illustrate.

In the early days of electrical power, there were a variety of voltages and frequencies; each advocated for various technical and/or marketing reasons. Thomas Edison, for example championed DC as the best method based on technical considerations. Once 60 Hz, 115 Volts AC became the power standard in the USA, the technical advantages of DC or of other frequencies and voltages of AC became irrelevant to the US market.

Prior to 1911 every typewriter manufacturer promoted different arrangements of keys on their keyboards. Each manufacturer argued technical advantages, but, in fact, each knew that once a typist learned to use its keyboard, she was unlikely to buy another product because she would have to relearn to type. The QWERTY typewriter keyboard happened to be on the first typewriter in which the typist could see a character immediately after typing it. That typewriter was introduced in 1911 and became wildly popular because of the visibility of the typing. The QWERTY keyboard was dragged along as a market standard, learned by the vast majority of typists. Other manufacturers were forced to adopt the QWERTY keyboard in order to have a chance at selling to the majority of trained typists.

In the 1930s, a man named Dvorak introduced a technically superior typewriter keyboard. The Dvorak keyboard enables one to type 20% faster, go for hours without fatigue and learn typing in half the time. Today, it is used by less than 0.01% of the market!

The TV picture standards of the United States were established in the late 1940's when technology was limited. Picture quality is marginal. Significant improvements in picture quality have been available for decades. The European standards, which were adopted much later, have significant improvements in picture quality. Those improvements aren't used here because adopting them would require us to abandon technical standards that connect content producers, broadcasters, audiences, and TV manufacturers. The requirement for backwards compatibility with existing standards seriously limits what can be done to upgrade or change our TV standards, typewriter standards, power standards, and Personal Computer operating system standards.

Successful companies, like Panasonic with its backing of JVC's VHS video recording technology and Netscape with its Internet browser technology, have recognized the importance of market standards to their long term success. They made "establish a market standard" a first order of business. In the battle between VHS and Betamax video recording standards, VHS won. Betamax was technically superior (like Apple's PC) but it didn't matter once the market standard was established.