Someone may have said that and then was likely shouted down by others thinking that they could use the Playbook to drive sales of their phone division. Still a laughable decision though.

This seems entirely possible. One of the big problems at large companies is that political clout is often tied to how much revenue your division bring in. That makes sense, except that whatever group is making the "new/next thing" is almost always much smaller revenue than the current mature business. So they lose those kinds of arguments.

Wow. So that's what's behind the innovator's dilemma? Your competitors will cannibalize the market share of your existing products, when your own staff could have gotten there first but their part of the organization didn't have the authority to get away with it?

I think it's more complex than that - there's also usually more risk associated with the newer technology, and it's often lower margin (not in this case.) So you have this new division saying, we're going to build a product that cannibalizes our main business, and makes less money per customer... and that's just not very easy to sell.

So instead, someone who doesn't have your old business comes along and builds it instead. And you end up either buying them, or fading away.