Olympus and Panasonic have made a lot of money selling four-thirds format cameras, for advantages quite unrelated to sensor cost. These two companies carved an entirely new market segment (very small high-quality-sensor exchangeable lens cameras). Previously there was no exchangeable lens digital camera that was both small and optically (sensor and lenses) high quality. What's more, in the traditional segments Olympus was a bit player with sales very disapponting compared to the Canon juggernaut. So this story is much more about an old player deciding to play an entirely different game rather than just keep getting the stuffing beat out of them by just going along competing directly.
They've done well enough that other players (Sony, Samsung) are jumping in and trying to pitch their own mirrorless formats to try to win a piece of this new market segment. There is speculation Nikon and Canon will try as well.
The Four Thirds format - i.e. traditional SLRs with smaller sensors was a failure until they pivoted into Micro Four Thirds (EVIL cameras, "electronic viewfinder interchangeable lens"). The cost advantages of four thirds sensors never materialized, and the smaller sensor size is only a marginal advantage when it comes to integrating into smaller devices.
This is evidenced by the fact that a mere year after the launch of the first Micro Four Thirds cameras, Sony has already hit the market with the same concept, but they're doing it with a larger APS-C sensor (and also no bigger than the E-PX and GF-X series of Micro Four Thirds cameras).
Olympus and Panasonic rightly deserve the credit for inventing the entire concept of EVIL and bringing it to market, but IMHO it has little to do with the Four Thirds format. That whole thing was a bad idea to begin with. APS-C sensors are widely available and commoditized, so there are no cost advantages, and there is not necessarily a significant technical advantage either.
As for whether there is nothing worthwhile in their smaller sensors, well, time will tell. Today, there is no MFT-competitor (Sony, Samsung) lens with Aperture below F2.8. That's pretty half-hearted competition.
What Olympus did was exactly the opposite of the article - they gave themselves the ability to make lenses that were much smaller and cheaper, or much more ambitious in performance for the same size/cost - by gambling that semiconductor progress would make smaller sensors just as efficient as large ones.
Should Apple have never started with iphone development because Nokia/Ericson were rapidly innovating in the phone space? Iridium back in 1990 thought they had the equivalent of an Apple iphone in their solution.
I don't actually think the article contributed much in the way of insight. Without trying to be rude, your last sentence not to bet a business on a transitory problem is fairly self evident - the real value is if you can outline how to avoid stepping into such a situation without the value of hindsight (which the article fails to do).
In the case of the iPhone, there was a lack of innovation. The silicon of the day was up to the task. It's just that nobody had a product like the iPhone. The closest you'd find would probably be a Blackberry.
There is a startup (forget the name) who is seeking to bring smartphone like features to the much larger feature phone segment of the market (~80% of the market). It's a big idea and the potential market is huge... on paper.
The problem? Technology is ever changing. Today what are $500-1000 devices (and thus the top 20% of the market) will in 2 years cost half that and be 50% of the market. So they're betting on a business that by the nature of pretty much anything to do with silicon, is a dying business. Basically all phones will be smartphones in the next 5 years.
In the digital camera market, Olympus and some others designed the FourThirds sensor format for digital DSLRs some years ago. They did this at the time when Canon and Nikon were making larger sensors and putting them in $1200-2000 bodies. Their idea? Reduce the cost of the sensor and have something that is compelling both in terms of price but in body and (in particular) lens size.
The problems? APS-C sized sensors became basically a commodity item. So FourThirds has only a size advantage and not really a cost advantage. Canon and Nikon (in particular) have much larger markets and the economies of scale that really matter when it comes to lenses.
So the lesson of the article is don't bet your business in what is a transitory problem.