I was just commenting on another blog about the balance b/t feature parity and feature innovation. I agree with you that feature wars are bad for all but the leader. The challenge is getting your product to a place where you don’t have to play catch-up with competitors.

In order to leap-frog past them, you have to make sure that your product does not have any significant competitive deficiencies, or if it does, that your innovative feature overcomes the deficiency.