Complete rewrites are much more affordable when you don't have to care about details such as market share. It does leave you with a lot of work and no shipable product while competitors are producing improvements.

There are no easy solutions to that. Just think of how long the road was for Microsoft to replace Windows 3.1 with Windows NT. (I think we all know that Windows 95 was not, despite many claims otherwise, actually a complete rewrite...) And I think that they handled it pretty well.

As an ironic example of not doing it so well, I'd like to point at Microsoft's current problems with Internet Explorer 6.0...

Cheers,
Ben