[charcircuit]

That would make this a poor analogy as anyone can create their own hardware + software ecosystem.

>Then the incumbent can bankrupt you instantly by undercutting your price

This could be mitigated by longer term contracts so you are guarenteed a certain amount of payment to make it worth your time before the other company lowered their prices to start competing.

[Nevermark]

Obtaining water rights in some other locale, and piping it into a town some way, is probably easier than competing against a trillion dollar entrenched tech ecosystem.

But the water system, or general utility problem, is interesting for many reasons.

Dual sets of infrastructure double the supply costs for a critical input like water, without actually increasing the supply that nature provides.

The solution to keep costs and prices down is then generally to give (or accept) a water supply monopoly, but with price regulation. That is the common solution to avoid price gouging in that monopoly situation.