Anatomy of a failure: picturephone revisited

The picturephone service launched by American Telephone and Telegraph Co (AT&T) in the early 1970s was a market failure. A study was conducted to discover the reason for this failure. It was found that while customer response was favorable for the innovation, the public did not want to use it themselves. It was not a question of technology but of public perception of the product's usefulness to themselves. A similar situation existed for AT&T's videotex in which real consumers showed little interest in investing money on the equipment.