Alpha
The alpha build of the software is the build delivered to the software testers, that is, persons different from the software engineers, but usually internal to the organization or community that develops the software. In a rush to market, more and more companies are engaging external customers or value-chain partners in their alpha testing phase. This allows more extensive usability testing during the alpha phase.
In the first phase of testing, developers generally test the software using white box techniques. Additional validation is then performed using black box or grey box techniques, by another dedicated testing team, sometimes concurrently. Moving to black box testing inside the organization is known as alpha release.
Beta
Betaware is a nickname for software which has passed the alpha testing stage of development and has been released to a limited number of users for software testing before its official release. Beta testing allows the software to undergo usability testing with users who provide feedback, so that any malfunctions these users find in the software can be reported to the developers and fixed. Beta software can be unstable and could cause crashes or data loss.
Developers release either a closed beta or an open beta; closed beta versions are released to a select group of individuals for a user test, while open betas are to a larger community group, usually the general public. The testers report any bugs that they found and sometimes minor features they would like to see in the final version.
Reference:
http://en.wikipedia.org/wiki/Software_release_life_cycle
