The Three ways to Beat Competition
Schwartz is peg-on the mark with his response. He also illustrates two of the three pillars companies can use to beat back competitors:
You can litigate them, either directly (SCO/MS threat to open source) or indirectly (RIAA suing customers to stop piracy caused by third-party products);
You can legislate them by getting onerous laws passed that favor your product/company over others (NAB petitioning US Congress to prevent the merger of Sirius and XM satellite radio - even though terrestrial radio is either dying or merging into an oligopoly rivaling the satellite services);
Or, you can continue to provide meaningful solutions that get the customer to favor your product over a competitors. This includes mergers and acquisitions to strengthen your customer relationship through additional products and services.
The only problem with the last is that even the best companies can make mistakes innovating, and, unlike the first two choices, there is no "partial benefit" from either scaring off customers from other solutions (even if litigation fails in most cases) or from getting some favorable treatment from legislators (and costing competitors some large chunks of change to pay THEIR bribes). Unless you can leverage the IP you generated in a failed R&D effort to litigate against others...
(A point on the latter: most people don't realize that, in addition to patents for innovations, most large companies insist their inventors patent FAILURES as well. This allows the original company to sue a competitor that succeeds where they failed - and prevents a possibly better solution from replacing the lame-ass one they chose to pursue. See the litigation between RCA and Philo Farnsworth over raster-scan television that ran for decades as RCA tried to protect a clearly inferior rotating disc television system.)
Mr. Schwartz needs to be congratulated for his poignant rejoinder to Microsoft, and Mr. Vance should be given free drinks for life for bringing this to our attention in small words us management types can understand.