[paulajohnson]

This reads like a case study from "The Innovator's Dilemma" by Clayton Christensen.

TL;DR: big incumbents (e.g. IBM) get out-innovated and replaced by scrappy startups even when the incumbent sees it coming and tries to react. The incumbent's business processes, sales metrics (NPII in this story), internal culture and established customer base make it impossible for an innovative product to succeed within the company.

The incumbent produces an innovative gadget. It may even be good, but its Sales Dept earn their quarterly bonus from the existing product line sold to the existing customers. They haven't got time to go chasing small orders of the new gadget from new customers who they don't have a relationship with, and the existing customers don't see the point of the new gadget. So orders for the gadget stagnate.

Across town is the small scrappy start-up making a similar gadget. It lives on those small orders and has a highly motivated sales person who chases those orders full time. So their orders grow, their product improves from the market feedback, and one day the new gadget is actually better than the incumbent's main product. At that point the incumbent goes out of business.

[Joker_vD]

It actually is a case study from the Innovator's Dilemma:

    Yet IBM’s success in the first five years of the personal computing industry stands in stark contrast to
    the failure of the other leading mainframe and minicomputer makers to catch the disruptive desktop
    computing wave. How did IBM do it? It created an autonomous organization in Florida, far away from its
    New York state headquarters, that was free to procure components from any source, to sell through its own
    channels, and to forge a cost structure appropriate to the technological and competitive requirements
    of the personal computing market. The organization was free to succeed along metrics of success that were
    relevant to the personal computing market. In fact, some have argued that IBM’s subsequent decision to
    link its personal computer division much more closely to its mainstream organization was an important
    factor in IBM’s difficulties in maintaining its profitability and market share in the personal computer
    industry. It seems to be very difficult to manage the peaceful, unambiguous coexistence of two cost
    structures, and two models for how to make money, within a single company.

[cmrdporcupine]

IBM didn't create an innovative product though. If you look at the era, there were dozens of machines of a similar style on the market, either z80 or 8080, 8088, even 8086... but they ran CP/M. PC-DOS was effectively a kind of fork / rip-off of DR's CP/M, but clean room and customized for 8086.

IBM created a rather generic machine using off the shelf components, and someone else's operating system.

Innovation factor was almost zero.

The only advantage it had was it had IBM's name on it, and IBM was still a Really Big Deal then. It brought "respectability" to a thing that before was still a weird subculture.

[NetMageSCW]

I don’t know, I think the concept of a BIOS with a documented API and the included minimal component set (e.g. serial port, parallel port) raised the bar on what third party software could assume existed and could be accessed over the existing 8-bit computers if the time.

[close04]

> The incumbent produces an innovative gadget. It may even be good, but its Sales Dept earn their quarterly bonus from the existing product line sold to the existing customers.

In a rare feat, Apple managed to do just that with the iPhone, which ate the iPod’s lunch. This at a time when the iPod was a core product, directly responsible for their revival and success, that could have been milked for years to come.

[NetMageSCW]

One of Apple’s founding philosophies from Steve Jobs made this explicit:

“One of Job's business rules was to never be afraid of cannibalizing yourself. " If you don't cannibalize yourself, someone else will," he said. So even though an Iphone might cannibalize sales of an IPod, or an IPad might cannibalize sales of a laptop, that did not deter him.” — Walter Isaacson

[kalleboo]

They also kind of did it with the Mac. For 4 years after the Mac was introduced, it was still the Apple II that was paying the bills, the Mac was flopping. It took stubborn management to keep investing in the Mac and not give up on it and try to evolve the Apple II instead (imagining a future based on the IIgs here)

[AngryData]

Ehh, im not sure they could have milked it for very long, if the iphone didn't come out somebody else would have made the same kind of device within a year or two and made ipods obsolete shortly after. PDAs were already a thing with many models and competitors, cell phone transceivers were getting far smaller and efficient, and solid state storage was getting reasonably cheap.

The most impressive thing about the iphone I didn't think has anything to do with the technology, and everything to do with timing the release of a mobile device to hit the sweet spot between the cost of the hardware and capability of the hardware.