I'm not saying it can't work that way -- just that it often doesn't if you don't have good people. Also, even if you have good people, when the product group is more or less a single silo and you have a dozen different engineering teams working on various modules of a product, communications get lost and balls get dropped and you need some sort of communication process that ensures at a bare minimum accountability (which usually ends up at Agile).
I know a lot of people would say "Well just hire better people," but that's often not realistic. It takes time to hire people, corporate HR processes are terrible at differentiating good developers from mediocre ones. In the time it takes you to hire people, you still need to ship product.