OP may have meant iPhone, but the best example is the iPod -> iPod Mini, as well as the iPod Mini -> iPod Nano. Both products were flying off the shelves and racking up massive sales when Apple undercut themselves with the cheaper product (the Mini) or completely replaced it with a radically different form factor (the Nano).

In both cases it seemed like money on the table, but in both cases the products became the core of Apple's product offering and dramatically out-sold their predecessors.

I think the poster meant how the iPhone cannibalized the iPod.

There is nothing particularly brave about cannibalizing a rather cheap product (iPod) with an insanely more expensive one (iPhone), that also turns out to become obsolete much more quickly. I should know: I bought one iPod Nano and my sister-in-law is still using it today, however I'm on my third iPhone already.

The iPad Mini cannibalizing the iPad, or the iPad cannibalizing the MacBook are much bolder moves. That iPad Mini Retina does look good...

Yup, and also how successive generations of the iPod blew the previous generations out of the water, again and again.