As a product manager, it is my job to perform good competitive analysis.
For example, in examining eBay over several months, I reached a conclusion: eBay had to do something about their core eBay marketplace getting so cluttered with commoditized items and Buy It Now auctions. (Disclaimer for those unaware, I work for Amazon.com). As I watched their ProStores and Express offerings, it became clear to me: eBay was executing a strategy to clean up their core marketplace for their customers. That's why the screaming from the eBay seller community is falling on deaf ears: eBay wants those sellers to sell through ProStores or Express. Often times, this is easy to do from the outside - no trees to try to see the forest.
(Side note... as an eBay fan, I applaud eBay's move... maybe I can start finding stuff on eBay again)
But what about future competitors? While it's obvious to look at existing competition, big or small, it's not so obvious to take a look at non-existing competitors. Sometimes it is obvious - Google, for example, is showing it's taking on all comers in all spaces of software applications. Any online offering is likely to compete against Google now or in the future.
I have begun looking at future entrants to my space and predict what they will do. What will their value proposition be? What strengths will they leverage? Where will they be weak? What will their roadmap be? What market segments will they target?
Try it. Extremely interesting stuff. Better yet if you do this for a no-name, startup that enters your space.