qI have enjoyed reading Clayton Christensen's books on disruptive innovation and observing how many of the concepts articulated in his books have played out in the CRM market and beyond. With the theory in mind it has been fascinating to watch as smart people have behaved in ways that are predictably on target or way off the mark. One of the more interesting chess matches to watch over several years has been the growing importance of hosting in the CRM market.
Christensen's theory says that a disruptive innovation gains a foothold among customers who are un-served or under served by the mainstream product. At that point the disruptive innovation is no match for the up-market product in features or functionality, but for the under served, it is better than nothing and its low cost makes it attractive. Gradually, the product that wasn't quite robust enough becomes more robust and begins to head up market to where more well-heeled customers are and it begins to displace the incumbent.
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