At this point, a disruptive technology may enter the market and provide a product which has lower performance than the incumbent, but exceeds the requirements of certain segments thereby gaining a foothold in the market. Christensen distinguishes between low-end disruption which targets customers that have been overshot and new-market disruption which targets customers that could previously not be served profitably by the incumbent.

The disruptive company will naturally aim to improve its margin (from low commodity level) and therefore innovate to capture the next level of customer requirements. The incumbent will not want to engage in a price war with a simpler product with lower production costs and will move up-market and focus on its more attractive customers.

After a number of iterations, the incumbent has been squeezed into successively smaller markets and when finally the disruptive technology meets the demands of its last segment the incumbent technology disappears....

Not all disruptive technologies are of lower performance. There are a several examples where the disruptive technology outperforms the existing technology but is not adapted by existing majors in the market. These occur in industries with a high capitalization sunk into the older technology. To update, an existing player does not only have to invest in new technology but must replace (and perhaps dispose of at high cost) the older infrastructure. It may be simply most cost effective for the existing player to "milk" the current investment during its decline - mostly by insufficient maintenance and lack of progressive improvement to maintain the long term utility of the existing facilities. A new player is not faced with such a balancing act.

Some examples of high performance disruption:

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