It seems lots of commentors here could use a primer: a disruptive innovation is usually cheap, considered as "worse" by existing customers, and enters the market at the low-end. But it serves a new market who have different needs to the existing customers. Over time the disruptive innovation gets better until eventually it replaces the original. Classic example: PCs and mainframes.
(Note: technically the disruptive innovation doesn't have to be cheaper. It's just better on metrics the new market cares about but the existing market doesn't. Often that's price, but not always.)
http://i.saac.me/post/startup-related-words-youre-probably-u...