Woodman is a surfer—the market was right in front of him. He saw a need, and he solved it with a very simple, high quality device tailored to that specific need.
A better argument there has never been for solving real problems with real solutions, rather than trying to essentially trick people into believing they both have a problem and need a solution. The latter is possible, but the former is a far better path to success.
But, yeah, they weren't aiming for the sports video market and they don't especially have a brand there. Actually, neither Nikon nor Canon have an especial brand in even waterproof cameras. (Canon does have one--only recently updated--Nikon AFAIK does not.) The point about getting out of bed in the morning is probably relevant. You get to a certain size of company and even large niches aren't especially interesting.
Separately - who are GoPro's competitors?
A competitor is Conture. Search devinsupertramp on YouTube to see a few videos they have sponsored him to make with the cameras. I think one is of a blob.
Contour Contour+2, ContourRoam
Sony Action Cam (HDR-AS10 and HDR-AS15)
Polaroid XS7, XS20 and XS100
AEE BlackEye XTR (Magicam SD21) (www.aee.com/en/)
UnmannedTech FPV HD camera
Tons of unknown asian brands like 808 #16 720p micro camera ($8 to $40).
The only thing I wish the HD3 Black had was GPS so that you could geotag your videos. That's about the biggest missing piece to that camera, otherwise it would be perfect.
I really like the look and design of contour's latest model (Contour +2), but having seen the user reviews on Amazon.com and amazon.co.uk, I feel that for me the software quality and functionality issues mean that I just won't buy it, unless this is greatly improved.