product upgradation and product innovation

A while back, I read "The Innovator's Dilemma" by Clayton M. Christensen.

This book is very interesting in that it describes how an established company can be "beat" by an upstart when there is a technology shift (or disruptive technology) in a market.

The thesis is that an existing company will be so focused on keeping their established customers that they will not "take a chance" on a new technology that makes product improvements.

The first example that is shown is in the disk drive industry. The initial drives were built for mainframe computers and were large at 14 inches. As technology changed, the drives could be made smaller but, less storage was on the new drives - at first. The mainframe customers didn't care how big the drive was they just wanted a lot of storage so, companies that made the larger drives didn't produce the smaller ones.

This is a scenario of what would happen: the engineers would devise a way to have a smaller drive, they would pass the idea to marketing and marketing would go out to the customer base to try out the new idea. The customers would not care about the idea and the project would be put on the back burner.

But, the mainframe market disappeared and mini computers then personal computers then laptops became the norm. And, as we move across the types of computers, the drives got smaller due to the "packaging" of the product. Manufacturers had difficulty building for the next product down the line while they had a large established base of customers in the present. Their existing customers did not have a use for the smaller drives.

In this scenario, the upstart company would take the market - then as there was another technology shift, they would fall prey to what happened to their predecessor.

I found this to be an interesting phenomenon.

Question for the class: Can you think of any other industries where this type of innovation occurred and incumbent companies did not succeed?