Agreed, knowing when to cannibalize your own market is one of the key inflection points.
Apple has done a fantastic job (up until now) of introducing something that basically makes a "current at the time" product obsolete.
Classic version was the iPhone when iPod was a household name. A more conservative company would figure out how to keep the iPod market extremely healthy, but in the end losing out on the whole pie. A lot of smaller/other instances as well.
> IBM made much more money on an AS/400 than a PS/2 model 95.
I wonder if someone high up in IBM made the same mistake for personal computing that Ballmer did with the iPhone - "There's no chance that the iPhone is going to get any significant market share. No chance..."
To be explicit, making the bet to cannibalize your own market is one of the toughest any company can make. High risk, high reward. It's so easy to point at the winners and forget the landscape that laid waste to the ones that lost.
But, being able to do it consistently is what makes a company multi-generational.