Later entrants frequently offer a better product and still struggle against the company that arrived first. The advantage is not the product but the position the first entrant occupies in how buyers think about the category.
The first known option defines the category
When people encounter a new type of product, they form their understanding of what it is from the first version they meet.
Subsequent products are then evaluated as variations on that reference rather than on their own terms, which forces the newcomer to explain itself in the incumbent's vocabulary.
This holds for the first widely recognised entrant rather than the first to exist, since a product nobody encountered establishes nothing.
Comparison happens against a remembered standard
Buyers do not evaluate every available option, since the effort of comparison exceeds the benefit for most purchases.
They consider a small number of options they can recall, and the reference product is almost always among them.
A superior product that is not recalled is not compared, which means visibility acts as a precondition rather than as one factor among several.
Being better is harder to communicate than being different
Claiming superiority invites verification the buyer has no easy way to perform, and every competitor makes the same claim in similar language.
Occupying a distinct position is easier to convey, because a difference in kind can be stated in a sentence and confirmed quickly.
This is why later entrants often succeed by serving a specific segment or need rather than by competing directly on the incumbent's terms.
The advantage is defensive and can be lost
First position resists direct assault and does not protect against a change in what customers want or in how the product is delivered.
Incumbents in this situation frequently defend the category as they defined it, which is the position that has stopped mattering.
Their advantage was in owning a definition, and it disappears with the definition rather than with the arrival of a better competitor.
New categories can be created rather than entered
Where an existing category has an established leader, an entrant can define a narrower one in which it is the first recognised option.
That requires the narrower description to be meaningful to buyers rather than an internal distinction, and most attempts fail this test.
Where it works, the company competes as the reference point in its own category instead of as an alternative in someone else's, which is a considerably better position to argue from.