This weekend, the Palm Pre was released, and I cannot tell you how many times I have read something along the lines of "Why did Palm even bother?". Each and every time I read a comment like that... it is clear to me that those people have no idea how businesses work.
Here is the deal: Every time a company comes out with a new product, whatever it may be that product is meticulously overviewed by it's competitors. Companies look at what is working, and what isn't then they take that knowledge and apply it to their own product.
It is important to remember; competition is what drives innovation. Going back to the iPhone V.S. Pre scenario. Let's say, for the sake of this article. that the Pre outperformed the iPhone. Not only would that be a good thing for Palm users, it would also be... in the long run, a good thing for iPhone users as well. You see, that would cause Apple to get to work, and push themselves to the maximum to try and become the best. Which has a positive effect on consumers, getting better, more advanced products. Which then becomes a cycle. Also, on a more simple basis, more competition equals more consumer choice, which is always a good thing.
The bottom line is; Competition... even failed competition, is a good thing.