Surprised? Well let me explain. Going by the stage at which your product was- you were not catering to the early adopters- the category who are willing to try out anything new. It is the early adopters who are buying the product of your rival at this point and these people never buy a product which is at peak of its product life cycle( Where you are!). So essentially the rival product is not competing with you in a big way at this point.
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