When product or service is launched, the new entrant tries to gain marketshare from the older, more established companies by offering discounts. The established companies may remain complacent and not do anything, especially if their product quality and customer support cannot be matched.
If the established companies is financially strong, they can try to kill the competition by offering their product at a even lower price. Finally, the company that can sustain losses for the longest period of time will dominate the market.