The problem with competing on cost is that you end up winning those customers who are most concerned with cost. Consequently, if another competitor that is cheaper than you enters the market, or if an existing competitors changes its pricing, you will end up losing all the customers you just spent $$$ acquiring.
What about building a near clone that is perfectly suited for a use case that isn't particularly well met by the other product?
What about building a near clone that is perfectly suited for a use case that isn't particularly well met by the other product?