SmallElectronics companies and projects have illustrated this really well in the last decade.

On Disruption

DisruptiveTechnologies are worse but cheaper, and appeal to a new class of smaller, cheaper customers who accept the limitations as the price of getting into the game.

A company can do well by riding the updraft as these small customers grow in their requirements and pull the supplier up with them.

BUT to keep riding these thermals, you always need to be searching for and finding the next generation of even smaller, poorer customers with more basic requirements, and grow with them. (WorstConnected?)

On MicroISVs

Apps can be really small but really useful. The problem is selling them. OnApple solved this through their AppStore model.