Most software is fungible these days. Snap (NYSE: SNAP) has called itself a “camera company,” which is clumsy shorthand for its goal of becoming a premier consumer hardware company. While Snap has successfully created exciting marketing events with its filters and is well-situated to promote blockbuster movies, this expertise alone cannot justify its current valuation. Following Larry Ellison’s unrelated comments many years ago about “going back to the future,” hardware is becoming sexy again because software features are easily replicated.

My main concerns are 1) Snap’s main user base is between 10 and 29 years old; and 2) GoPro (Nasdaq: GPRO)) is already the premier camera company.

With respect to 1), this group lacks high levels of disposable income and isn’t known for brand loyalty, indicating hardware margins or profit may be stressed. As for 2), if Snap plans on avoiding competition with GoPro by focusing on teenagers and younger adults with cheaper products, Polaroid and vintage cameras have already been done. Spectacles is not revolutionary unless you count flashing lights as a remarkable innovation over Google Glass. How does Snap plan on differentiating itself long-term?

Unlike Amazon (Nasdaq: AMZN), Snap cannot displace existing software and hardware companies, which have entrenched users and their own “sticky” ecosystems. Furthermore, how many different ecosystems will consumers tolerate before they become frustrated? A quick online search shows several apps capable of adding both filters and special effects to pictures, such as BeFunky.com. In short, Snap lacks a “wide moat” from a technological standpoint and needs to quickly capitalize on its accomplishment of being first to market and capturing younger users.

Being first to market can be a long-lasting advantage in the consumer market. Success begets success as retailers provide more prominent shelf space to faster-selling products, leading to relationships between suppliers, advertisers, and manufacturers that are hard to displace. If a consumer company is first to market, competitors often end up vying for second place, fighting over shelf and virtual space that hasn’t already been allocated to the market leader. Older readers might remember that Gameboy was first to market and maintained its leadership position in the videogame industry, even though Sega later produced a much better product. In fact, Nintendo continues to ride the success of the Gameboy today, while Sega sputtered with its Dreamcast console, becoming the Reebok to Nintendo’s Nike.