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Trying to please their top-end customers, high-tech producers overshoot what most of the market needs. Think of over-featured Excel and over-powered Pentium chips. This gives an opening to disruptive technologies to enter the market. Inferior at first, they win out by meeting the market's needs at a more reasonable price.
Hence, Digital Equipment didn't see the PC coming because their customers couldn't us it. DEC kept margins high to support sales; the PC, with lower margins, wasn't as attractive. Java is a disruptive technology if you're Microsoft. A new business model built on a disruptive technology is tough for an established player to gravitate to. This is the Innovator's Dilemma. There's always another innovator just around the corner.