If you're selling a subscription to a best-in-market service, there's not a lot of motive to innovate, agreed. Maybe you'd try a new product or a premium variant, but there's no reason to sink effort into advances that won't let you expand userbase or raise prices.

But for Intel? Before AMD got going, Intel's biggest competition was itself 9/18 months previously. Innovation wasn't just for new devices and new buyers, it was how they sold updated processors for machines that were already Intel Inside. They're not waiting on processors to die, they're actively pushing for them to be replaced for performance reasons.

That might create an incentive to release 'good enough' updates and dole out big improvements gradually, but in practice any of that which happened was already ending. Intel appears to be up against the wall regarding 10nm even with a competitor, and has been attempting major innovations to handle 7nm and below for years. With a revenue stream that relies on annual improvements to their product, they seem to have been learning hard into innovation and struggling, rather than waiting for a competitor.