"Path-Dependency" Revisited

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October 27, 1997

"Path-Dependency" Revisited

By Stuart J. Johnston
ast week, the U.S. Department of Justice finally sued Microsoft.
Examining the Department of Justice's complaint, though, it's clear that the government will, for now at least, focus narrowly on whether Microsoft violated its consent decree by insisting that PC vendors ship one product -- Internet Explorer 3.0 and 4.0 -- in return for licensing Windows 95. It leaves untouched Microsoft's plans to integrate the browser directly into the user interface in Windows 98 and Windows NT Workstation 5.0.
And the complaint doesn't even mention the term "path dependency." That is not good news for many Microsoft-bashers, who would love to see the Department of Justice take that concept and use it as a sti ck to beat Microsoft with.
For those who missed it, the path-dependency argument states that once a technology becomes established, by whatever lame set of short-term circumstances, then the rest of us are all doomed to using inferior technology forever after. Superior technology that comes along later cannot get a foothold because the "path" has already been established and consumers are "locked in."
I won't discuss the relative merits of the path-dependency argument vis-à-vis Microsoft Windows here. However, proponents of the path-dependency theory almost always mention two other classic examples of it in the same breath:
If it weren't for path dependency, they claim, we would all be using the Dvorak Simplified Keyboard and typing 20% or more faster today instead using of the kludgy, antiquated QWERTY keyboard.
If it weren't for poor consumer choices early on during the so-called VCR wars of the late 1970s and early 1980s, Sony's Betamax VCR format would be dominant today instead o f VHS.
The QWERTY keyboard, named for the first six letters across the top left row of letter keys, is almost 125 years old. It was invented to keep typists on old manual typewriters from jamming the keys by typing too fast. That is, the keys were arranged so that you could only type so quickly.
The path-dependency argument asserts that the Dvorak keyboard, designed in 1936 by University of Washington professor August Dvorak, allows for much faster typing.
But, darn it, by the time Dvorak came along, the QWERTY keyboard was already established and, despite all the studies showing how much more productive a Dvorak typist can be, path dependency has kept the world from retraining all of its keyboardists.
That is a great fantasy.
But according to an article published in 1990 by two leading economics researchers, Stan Liebowitz and Stephen Margolis, in the 61 years since Dvorak's keyboard was introduced, there have been no reliable studies showing any significant superiority of the Dvorak keyboard vs. QWERTY. The most-often quoted study, performed by the U.S. Navy in 1943, was not only entirely non-scientific and biased, but may even have been personally overseen by "Lt. Cmdr. August Dvorak, the Navy's top expert in the analysis of time and motion studies during World War II." ( http://wwwpub.utdallas.edu/~liebowit/keys1.html )
Path-dependency advocates also ignore a string of studies to the contrary, including a 1956 federal General Services Administration study that found that Dvorak offered "no advantages over retraining on QWERTY." A subsequent 1973 study by Western Electric found that after 104 hours of training, Dvorak typists were 2.6% faster than they were on QWERTY, while a 1978 Oregon State University study found that after 100 hours of training, typists were only 97.6% as fast as they were on QWERTY.
Other, more recent studies showed similar results, with the most outstanding showing about a 5% speed increase in the best case. That doesn't come close to the 180 words per minute claimed by some Dvorak proponents or the 20% to 40% speed increase claimed in an old Apple Computer ad.
Additionally, there were more than 50 competing keyboard layouts in existence when QWERTY was introduced in the late 1800s.
In the second example, VHS and consumer Betamax designs came out in the late 1970s, with the first Sony Beta home machines in 1975. VHS machines weren't introduced until nearly two years later.
Liebowitz and Margolis also eloquently discuss that example in a paper published in 1995. ( http://wwwpub.utdallas.edu/~liebowit/paths.html )
Beta initially had a noticeably better picture quality than VHS version 1.0, and the list of companies lined up to sell products based on Beta was daunting: Sony, Sanyo, Zenith, Toshiba, Pioneer, and Aiwa.
VHS, on the other hand, had poorer picture quality in the first version, but also had an impressive list of supporters: Panasonic, R CA, Magnavox, Sharp, GE, Quasar, Hitachi, and JVC.
However, the Beta machines were more expensive -- $1,000 and up -- compared to the VHS machines, which typically were less than $1,000.
And perhaps even more important to consumer acceptance, the original Beta machines would only record an hour of video on a tape. The first VHS machines could record two or four hours on a single tape. That meant that a consumer could pop in a tape and head out to the kids' soccer game without worrying that the VCR would cut off the end of a movie or the final play of a Monday night football game. Beta II, also introduced in 1977, just barely made it under the $1,000 price point and could still only record two hours.
Consumers went for VHS more than two to one. And by the time Beta machines began to compete on price and recording time, VHS had improved video quality to the point that Consumer Reports rated it higher in quality than Beta.
In short, perceived technical superiority was no substitute for satisfying consume rs' key purchase criteria.
For QWERTY, if there was path dependency, then it was based on whether a tiny increase in productivity was worth retraining millions of typists. And in this case, standardization turns out to be a good thing since it increases ready interchangability of knowledge.
And as for Beta vs. VHS, should consumers have been forced to spend more money and forego the ability to tape entire movies so that they could have a better video signal-to-noise ratio? On what grounds? That they don't know what's best?
In both cases, this was a free market resolving winners and losers on its own.
I would point out that, while Liebowitz and Margolis have argued against the path dependency theory vis-à-vis Microsoft, I wrote the first drafts of this column based on my own experiences, only stumbling onto their papers as I was tightening up the text. (My father was an early television engineer and, since I live in the Seattle area, the myth of former University of Washington professor Dvorak's keyboard was recognized long before the current brouhaha.)
So, at least in these two examples, like the saying goes: The customer is always right.
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