Except that facebook wasn't the first social network by a long way, and Google certainly wasn't the first search engine. The phone industry laughed at the iPhone precisely because it was competing with existing phone manufacturers.
There are plenty of ways to compete with existing products, especially if they haven't achieved market dominance. The key thing is can you offer anything they don't. Quality, cost, features, ease of use, etc. What part of the market does their product not address, preferably in a way it's hard for their product to be adapted for.
> The first iPhone was the first smartphone as defined today
Two reasons why not.
1. Wasn't first, e.g. HTC Touch was very close in terms of UX and form factor, released a month before iPhone.
2. Wasn't a smartphone as defined today. At launch it didn't have app store nor any user-installable apps at all, these features arrived much later.
To further elaborate, if you're first you can have an unpolished product which grants you gratification sooner and with less effort. If you want to enter an existing market you have to gain customers with much effort and risk (the competition can react).
Side note: the better toaster was sold first in the 50s and doesn't stop anyone of selling worse toasters :D [2]
[0] https://en.wikipedia.org/wiki/First-mover_advantage (1) The first iPhone was the first smartphone as defined today. [2] https://www.youtube.com/watch?v=1OfxlSG6q5Y