You don't even use their software (you can use a template of it, but you tweak it so as to make it your own) and regarding the hardware, you bypass it with a new design and also look over any patents they may have. Even Edison did this. He just built upon something old. Tweaked it a bit and a new patent on that one. Then commercialize. Patents are rather overrated. As you yourself have said: Execution is everything. In this case the marketing strategy is of highest priority. The tech stuff can always be converted to your benefit with a smart team of people and good legal.

Then, you could always debate that this is a dirty way of doing business. But then again, if you are going to beat the bigger guys or even get them interested in buying you out (for self preservational needs) then you need to play the game by their rules.

Also, let us not forget that the bigger guys have more eyes poked on them than your little company has eyes on it. The bigger guys can either start a war by getting into "sabotaging your company" mode and risk getting caught with their pants around their ankle (believe me, that would be a serious blow to their trustworthiness) or they could do the most sensible of things: Buy you out and get it over with.

After all, if you build something that is of value. That is better than what the big companies already have, then you have actually benefitted them if they buy you out. We are not really talking about a war scenario here unless they start it. The small startup does not start it. The small startup is already ready to sell out anyhow (that is the goal after all. That is the reason we start the damn thing in the first place). So no problem really exist. We want them to buy us out. If the first player is not "game" then the competition surely is. I would bet you they are.

It all comes down to spotting a weakness, exploiting it and sell it back to the slower party. And both will come out of it champs.