We address a longstanding question about the causes behind creative destruction. Incumbent dominant firms, long successful in an existing technology, are often much less successful in a new technological era. We argue that organizational diseconomies of scope between new and old businesses are an important reason why some firms cannot succeed in both old and new businesses. We examine two of the most important historical episodes in computing markets, respectively, the introduction of the PC and the browser. We examine the internal organization of two contemporaneously leading computing firms, IBM and Microsoft. Each firm, having been extremely successful in an old technology, came to have grave difficulties running an organization which could effectively compete in both the old and the new technologies. Our analysis locates the problem that each had firmly in the marketing or commercialization of new technologies. It was in the area of the greatest strength of these firms,not in any area of weakness, that the organizational diseconomies of scope arose.