Every 18 months or so the world changes. For example, today, the market for traditional word processor software is being challenged by the Internet in much the same way pens were initially challenged by typewriters. Writing is migrating from memos done with word processors to e-mails. And open html standards make proprietary word processing standards less important. The combination of rapid innovation and network effects leads to a very interesting form of competition in these kinds of markets-and writing implements is just one example.
Competition tends to be based on a series of races.
Lots of firms are trying to come up with the next great idea. And if you are in the market you really have no idea who these firms are because they aren't visible. Your competition is completely unknown, but you know that it is never far behind. We tend to evaluate the intensity of competition by how many firms we observe in the ring slugging it out. That is what is often taught in undergraduate economics.