Often times being different, not necessarily "better" can be an effective branding technique and business model.
There will usually always be someone "better" than you, the best way to compete is on a different field.
Facebook didn't have to be "better" than Myspace, it was different and ultimately won out.
Spotify didn't have to be "better" than Pandora, it was different and has been crushing it.
Netflix didn't have to be "better" than the normal movie-renting systems and now network television, it was different and the people chose it.
If you want to open a pizza-joint right next door to a 5 star restaurant that has won 2 michelin stars, you don't have to be better (and good luck trying). Be different. They serve $40 entrees, you serve 4 dollar slices. Make yourself authentic and you can succeed.
Monitor your competition and find the gaps. It's like what Samsung has done against Apple. You don't have to battle for quality, pick up the people who don't give a shit about what your competition offers. Profit off of belief systems. Some people don't believe in paying $600 for a phone that they believe are only slightly updated every 12 months. That's why Samsung made fun of those people and adopted the other half of the market with their "the next big thing is already here" campaign.
Different people have different pain-points in products. Being perceptive I think is one of the keys to being an entrepreneur or at that, just a successful business. Be perceptive of your user's wants, of your competition's pitfalls, of the people who don't like your competition's pain-points and capitalize off of all of them.
It's been a tried and true business model for hundreds of years. Read the "22 immutable laws of marketing" and see what monitoring your competition can unveil towards your business capabilities.
Just as Samsung is capitalizing off of what Apple doesn't do, Apple initially capitalized off of what Microsoft didn't do.
There is always room to be different. To take a category that has been tried and tested, and then apply what people want. Where there is demand, you form supply, put it out there and you will succeed. It's basic economics.
It's also too hard to stand out in this day in age by just battling on quality. You have to stand out to be noticed, and that's hard enough as it is. Controversy is an easy way to make a splash, and offering what your competition does not is an easy way to start that discussion.
Be different, not better.