A Disruptive Innovation is one that helps create a new market. The term was coined by Clayton M. Christensen in 1995.
Disruptive innovations are generally ignored by the mass market at first. They are often viewed with suspicion by incumbent operators even though they may have themselves come up with the innovation. The case of Kodak inventing the digital camera is a case in point. Incumbents, who may be protecting a high-margin product, are wary of cannibalizing profits with the new product.
Other examples of disruptive innovations include the mini-computer displacing the mainframe, and the mini in turn getting replaced by PCs and PC-based servers.