alt Hacker NewsRegarding horses vs. engines, what changed the game was not engine efficiency, but the widespread availability of fuel (gas stations) and the broad diffusion of reliable, cheap cars. Analogies can be made to technologies like cell phones, MP3 players, or electric cars: beyond just the quality of the core technology, what matters is a) the existence of supporting infrastructure and b) a watershed level of "good/cheap enough" where it displaces the previous best option.
It’s both. A steam engine at 2% efficiency is good only for digging up more coal for itself, and barely so. Completely different story at 20%. Every doubling is a step function in some area as it becomes energetically and economically rational to use it for something.