IMHO it's possible they actually did realize how ground breaking it was, but it's an example of big companies being structurally incapable of investing in the technology that will ultimately disrupt their core business.

I don't think it's a coincidence that pretty much the exact same thing happened to Kodak:

https://mashable.com/2012/01/20/kodak-digital-missteps/

This is also why I call bullshit on the concept that "good ideas don't matter" in business. Execution is important, but good ideas can be just as valuable. But the problem with innovative ideas is that they can be difficult to communicate. My favorite example of this is the adaptation of novels into feature films. It's usually the norm rather than the exception for a truly excellent novel to be adapted into a truly mediocre film which not only misses the mark of the book but also just doesn't seem to "get" the book at a fundamental level (e.g. themes, characters, etc.) And here you have a case where an "idea" (the entire novel itself) is fleshed out into a work containing tens of thousands of words, replete with scads of detail all over the place. And you also have proof that thousands if not millions of people are able to learn this "idea" and "get it". Yet that system of communicating an idea is still so fraught with the potential for error that it cannot reliably result in a feature film that even expresses the themes of the book with any semblance of authenticity. Because communication is hard, especially when innovative and novel ideas are involved.

And this is true in business just as it is in art. You can have a fantastic "good idea", one that is worth billions even if it is executed with only mediocre success. But that doesn't mean you could simply hand that good idea over to someone else and they would succeed with it to the same degree, because there is a very high chance that they just won't "get it". They'll hear the idea and think that you meant something else. Or they'll think some inconsequential aspect of it is the important part while ignoring the truly important part, and so on.

And we see many examples of this in history. We see XEROX looking at a nearly fully executed "good idea" in the form of the Alto and concentrating on temporary, less consequential aspects of it such as the high unit cost of the first generation computers and not seeing the enormous potential (a computer that was so easy to use anybody could use it, and a computer that was so useful that anybody could benefit from having one).

Good idea doesn't matter because good ideas are rarely exclusive. If one has a good idea, there is a good chance someone else has also came up the same idea. Thus how to execute that idea becomes critical, including access to capital, talent, market, etc. Amazon was certainly not the first to come up with e-commerce

There are always exception on both ends of the spectrum of course.

Your novel adaption analogy isn't exactly apt. You can't test a movie the way you can with business iteration. There are also no metrics to measure a movie's success the way you can measure revenue, customer retention, user usages, etc.