It was both. 90% of people never needed nor purchased a bleeding-edge computer. The mid-tier was "good enough" and far closer to affordable for most people; though, that bar also moved upward every year.

If you bought a mid-tier computer that was good enough for what you needed, then you probably didn't shop/compare for the next few years and didn't notice. But if you shelled out $7-10k for a top-of-the-line system and paid attention to progress, you'd easily see that become the mid-tier $1000 option within two years or less. This is how it was in the 90's PC boom, at least. Likely the same for the decades before, not sure how it went in the 2000's.