I was reading about Nintendo's decision to reinvent the controller and this passage jumped out at me:

"Focusing on product innovation at the expense of commodity markets is a classic business strategy that is used successfully in non-game companies around the world. Companies like 3M are required as part of their strategic plan to have 30% of their revenue come from new products. They are constantly exiting markets when strong competition emerges and constantly competing with themselves by offering new products that outdate their existing products...
"What you find is that selling innovative products early on can be dramatically more profitable and less risky than selling commodity products. The early market might not be as large, but the money is much better. You see this over and over again. Nintendo sells less but makes more money. Sony and Microsoft sell more, but make less profit."

This is recommended reading for anyone who wondered why Apple would axe its best-selling iPod in favor of a new model (and for anyone who is interested in Nintendo's new controller strategy).