ABSTRACT
It is not necessarily the company with the best product that becomes the market leader; it may very well be the company with the best strategy that wins the day. For example, in the mid-1970s Sony developed Betamax, the videocassette tape-recording format. Sony wanted to keep tight control over its patented product and did not freely license its technology for others to use. JVC, a competitor, then created its own tape-recording format, VHS, but JVC used a completely different patenting strategy. Due to their strategic plan, VHS, although in many ways technically inferior to Betamax, became the market leader. The difference was that JVC allowed its VHS to be licensed to numerous competitors. The large number of products using the VHS system and the economy of scale that resulted from this extensive use meant that VHS products became much cheaper and developed a huge market share. VHS became the standard videotape format, making Betamax almost obsolete. 1
