Based on superior technology and design capability, iriver(old name: Reigncom) had recorded a significant growth in the early 2000s and was ranked number one MP3 player maker in the world. iriver, however, suffered a great setback and went through the subsequent restructuring after Apple introduced the iPod nano. In restructuring process, iriver received the investment from a private equity firm and hired professional managers. The new management teams tried to reorient its corporate culture and reestablish its management and control system. And they also tried to transform iriver into a more profitable firm through its business restructuring and capability development. This case enables us to discuss the competitive strategy in the high tech industry, especially focusing on the the importance of installed base. This case highlights several pitfalls startup companies can fall into and some ways for them to upgrade their management systems as they grow. This case also enables us to discuss the corporate restructuring process and the role of private equity firms in the process.