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But copilot is bundled and is free, and it's still losing to cursor

Define losing? My company pays for Copilot but not for Cursor, and it's not at all clear to me that we're the exception rather than the norm. What numbers and data are you working with?

Copilot has every incumbent advantage, so if Cursor is doing halfway decent in the market (which it is), it's winning by default

That's not actually how unseating an incumbent works. The incumbent can adapt to the threat for quite a while if they act on it, they just have to not be Blockbuster. Copilot is showing every sign of making up ground feature-wise, which is bad news for the runners up.

Incumbent advantage of being in VS Code already? Thing is, Cursor is basically just VS Code, there's hardly any barrier to switching, so it's quite a weak advantage.

the incumbent advantage is the default distribution.

defaults matter

In brand velocity maybe, but copilot is rapidly reaching feature parity with cursor and will invariably overtake it—while costing less to users.

Same with Google vs OpenAI. I tend to agree with the sentiment that I most frequently hear which is that OpenAI is the currently popular brand, but that can only carry them so far against what will eventually be a better offering for cheaper.

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