I just think they were paralyzed by the paradigm shifts going on back then. They more or less led the dSLR game in the early- to mid-2000s. APS film cameras died, as digital point-and-shoot cameras flourished. Then the iPhone hit, Android hit, point-and-shoot sales evaporated, Kodak mostly died, Konica quit making film and paper and sold their camera division to Sony, Micro 4/3 was born... Canikon were still making good margins on dSLRs, so they just sat on their laurels with hubris and watched for a while. When Fujifilm, Olympus, Panasonic, and Sony started to have success with mirrorless, they played catch-up. They're starting to hit their strides.

Steve Jobs understood how to cannibalize a company's own products. The iPhone cannibalized iPods. The iPad cannibalized Macs. The whole point of it is to keep something fresh in the marketplace that people want. Want equals demand, and demand is what keeps prices up. As soon as something becomes a simple commodity like white bread or PCs, the profit margins evaporate because everyone's making it. Then the remaining manufacturers have to suck quality out of the product to survive. They're stuck with a declining market and not enough R&D money to innovate, in some cases. Finally, consumers abandon their products and move on. (Does anyone remember when RIM/Blackberry, Ericcson, Nokia, Palm, and Motorola were top phone makers?)