Since then, it's fluctuated in its rate of evolution relative to the industry standard. It always had cutting edge features, but they were trapped behind a troublesome UI, while the big competitors made their tools ever easier to use.
In recent years, the gap has been drastically closed due to a ground-up rewrite, completely new approach to the UI, and a tremendous effort to modernize.
Unfortunately, Blender still has a bad reputation, a legacy from the previous design. What's more, many studios and schools have firmly entrenched workflows, or depend on custom extensions written for a specific tool.
On the other hand, Blender seems to be enjoying popularity in the booming indie games community, where it integrates well with other free tools like Unity 3D.
With the new design, I wouldn't be surprised if Blender's best and most-popular days were ahead of it. I see share growth coming from individuals looking to make great graphics on a shoestring budget, as opposed to big studios or schools adopting it instead of Maya or Max.
I would argue that it is now roughly equivalent to those other tools in terms of features and usability. So, no real reason to switch (which requires expensive adjustments to existing workflows), but great incentive to adopt it in the first place (because it's free).