You make a leap in the story there when you assume that the incumbent will discover the innovation. It is so subtle too: and one of them happens upon the fact

I don't think its that easy, and the story could have turned out a number of different ways and you chose the one that supported your argument (much like I did in my other reply to you).

Increased competition could lead to a race to the bottom, with each competitor slashing prices, engaging in expensive marketing wars and predatory acquisitions. With so much heated competition, R&D budgets get slashed by short-term thinking managers. There is no innovation for a decade, only decreased profits.