The product is "much" better. However, once they get a few key customers - it's all about traction and they can sell others based on the first few. That's the worry here.
I don't think customers buy "better", they buy "solution". They don't care about elegance or how many features you have. Just, "does it solve my problem?". If two things solve the same problem, it may then come down to "how easy" and "how much money".
On a different note: if you have a plan, stick with it (if you think it is the right plan). Your competitors may have just validated the market for you.
Yes, they definitely have. They are getting traction - and fast.
I agree with they buy "solution" and even if better, they will stick with that old one for a while - which is why it's more important to get selling early I think.
Like someone else said here, out market them. Out maneuver them. Engage those key customers first. Don't over-promise, but tell them how "good" your product is.
It's definitely risky, but what other choices do you have?
Try not to give those "coming soon" promises, you don't want to be under even more pressure.
Good luck