Mutual Funds vs. ETFs: The 401(k) Format War

June 2, 2011 By Integrity Financial Corporation With Comments are off for this post

I recently read a great article at JDSupra.com written by The Rosenbaum Law Firm P.C.
via 401khelpcenter.com. Please see below.

A format war is when there is a competition between mutually incompatible proprietary formats that compete for the same market.

The most remembered format war is VHS vs. Betamax for video tape recorder dominance. As most people don’t remember, Betamax was actually the better technology. VHS won the format war because its originator, JVC licensed its technology to competitors which lowered the price for VHS video recorders (VCRs) while Sony was the only purveyor of Betamax VCRs. The other major difference was that VHS offered two hour recordings on its tape while Betamax only offered one hour recordings. Sony felt that a two hour recording made the recording inferior (which it did, remember using a VHS tape to record in SLP mode?) , but consumers wanted more tape space to record full length motion pictures (which are longer than an hour). So even though Sony had the better technology, they lost the format war because their rivals offered a product that was preferred by the masses.

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To read more, please visit the JDSupra.com article link.

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