Product Innovation

During the past maybe six or seven years I have seen a lot of product innovation, amongst companies. I have seen this innovation especially in Apple's Ipod. Around the year 2000 the ipod came out with just a black and white small screen. Now in almost 2010, there are color ipods, that have video, photo, and many other new features. But through the years they would make small innovations to the ipod each year, so most people would go get the "newest" ipod with the latest features. Then a year later apple would make another ipod with a slightly new feature. Im sure apple had the technology to make the 2009 ipod, back in 2002 but they just made small innovations each year for more sales.

Is this common amongst electronic device companies? If so, which ones and in what way?