(from Adaptive Path’s book) There once was a Software Company that wanted to make a video-editing product for Microsoft users in the late 90’s. Traditional quantitative market research techniques revealed there was a significant business opportunity to connect digital video owners with their computers.
User research revealed only 1/12 of the studied participants had been able to connect his camera to his computer, and had relied on the IT guy at work to set it up for him.
Deciding not to ahead with development, the Software Company put the project aside, potentially saving a considerable investment of time and money.
However, having designed a system to handle this entire process could have been a big success. Perhaps it was beyond the capabilities of the Software Company, but a system like the ipod>itunes could have built a competitive barrier to entry with a proprietary product/service combination.