That's the famous innovator's dilemma. It's very hard for a company to sell a product that undercuts a product that makes a lot of revenue for them, even if it's the "right" play. So that wouldn't be a risk I'd worry about in practice.
It would be a cheaper alternative for at least some use cases. At least some companies that were currently using the big version would switch to the lite version.
Yes, they are. But it's very hard for a company to sign off on releasing a product that's going to cost them sales of their big money-maker, even if in reality those sales are going to be lost to an outside competitor anyway.
