Zune flopped because it was a lousy product. Had it been a good product, and not flopped, how would that have been bad for you? Elaborate.
I think you've stated my point pretty well, actually. Competition is not
always good. My issue is with the word "always". Zune was a competitor to iPod, did nothing to make iPods better, and wasted resources that may have benefited me if they were applied elsewhere. It was a net loss to me (and, I think, the market in general).
If it had been a good product, and if it either forced a perceptible shift to Apple's products or offered a needed alternative for a significant segment of the market, then it would have supported the argument that
sometimes competition is good.
But people have stopped thinking about what competition means or how/where it's useful. They talk about it like electrolytes: "it's what plants crave!".
The rest of this is just my naive analysis of the smartphone market, and where I think competition is meaningless or net negative, and where I think it would be likely to be "great". In other words, it's probably a good place to stop reading...
TL;DR: While I think there are places where competition can still be good for the consumer in the current environment, I think the place where competition would truly be welcome is in providing another alternative, most likely proprietary, OS.
When I look at Apple's iPhone profits, it tells me there is room for more competition in the smartphone market. When I look at Apple's share of the industry profits, it tells me that Yet Another Android Device isn't useful competition, and isn't inherently good for consumers. There are already multiple great Android products out there, and YAAD can really only serve to divide up the pittance that Samsung is making into more pieces.
In the short run, and maybe with some help from the beneficiary of some positive externalities (like the Chinese government), a new manufacturer may be able to burn their investment dollars and make real technical improvements, but in the long run you can't afford to keep innovating if you have no profit to invest and nobody will invest where there's no return. Then it becomes an ugly cost cutting wasteland as the players bite and scratch to be the last company standing.
Competing on hardware hasn't seemed to impact Apple or the market in any meaningful way, and there's no money left on the Android side for innovation on the scale that Apple can finance so nobody will seriously invest in it. Samsung/Huawei aren't competing with technical prowess, they're competing with market advantage (carrier contracts, access to China, etc).
Android, on the other hand, is an important competitor to iOS. It has, I believe, given a meaningful alternative to a significant segment of the market and has had an impact on Apple's designs.
So the place where competition is still vital, and where you can go if you covet a some of Apple's profits, is software. Innovation in Android have the potential to pull customers from iOS (and Apple). Problem is that those customers are divided among multiple handset makers who must share the same Android features but the most profit they can see from those new customers is the margin on their hardware sales which is nearing zero with each new YAAD. This is a recipe for a race to the bottom-- basically any improvement to Android makes the average handset worse while the (mostly indirect) profits and positive externalities flow to Google, not the hardware maker so aren't reinvested into the business.
Just to speculate further: maybe this is why Google put a toe back in the hardware market. I thought it was weird to compete with your OEMs, but maybe it's a hedge against all your OEMs suddenly closing up shop and cutting off your access to the market.
