In the past, full-service stock brokerage firms had a strategic advantage over discount brokers because of the control full-service brokers had over the information provided to the customer. Full-service stockbrokers acted as information intermediaries in that they were able to capture residual value from the transfer of information to make a profit. Strategic vulnerability occurs, in this case, when technology makes the information intermediaries' market contestable, by allowing easy transfer of information, thus allowing competitors to establish themselves as alternatives to market leaders. This research explores how technological innovation sets the stage for strategic vulnerability for information intermediaries. We develop a model of the phases of strategic vulnerability and discuss three propositions that involve strategic vulnerability, stalling of technological adoption and value creation. We show how strategic vulnerability affects information intermediaries. We examine the electronic brokerage industry to illustrate how firms can retain competitive advantage by rebundling their product offerings to separate contestable from non-contestable products.