No, innovation isn't about making the previous generations of a device feel obsolete. It is a fine balance... that is where incrementalism comes in. It is arrogant for a company to produce a follow on generation of a device soon after the previous in a way that instantly makes the previous generation look and feel useless. It makes the early adopters and current customers feel abandoned.
How many times has Microsoft proverbally kicked early adopters in the teeth?
Apple was successful in building their customer base (loyalty) by producing a good product for the current generation. Then producing an upgrade that was a little better here, a little better there. No one area of the device was dramatically better than the previous gen. But taken as a whole, it added up to a significant upgrade. People who purchased a gen "x" iPod didn't feel suckered when Apple produced the "X+1" gen.
Microsoft needs to satisfy the customers of their CURRENT generation so that when it is time to upgrade, they'll be confident in doing so.