The Innovator's Dilemma is an eye-opening book that everyone in the technology industry should read and understand.  I recently ran across an audio interview with the author, Clayton Christensen.  In it he gives a brief explanation of the main thesis of his book.  That is that there are certain types of technology that are disruptive.  They are at first underperformant of the market but allow for new uses.  Over time, they become good enough to subsume the previous solutions.  A good example is that of the PC.  When the Apple // and IBM PC first launched, they couldn't do the work of real business.  For that, you needed a minicomputer.  Over time, however, the PC became powerful enough to do everything that a minicomputer could and eventually totally replaced the minicomputer.  In his book, Clay uses examples as diverse as hard drives and earth moving equipment.  In this interview, he also starts to flesh out what he calls the "Law of conservation of modularity" which attempts to explain how the ability to make profits in a market changes over time.  He talks about how this affects Intel and how it will affect the software market.  I don't know that I agree with all of his characterizations but it is definitely thought-provoking.