Now, if the dominant player in a market was "foolish" enough to joyfully embrace standards even if their competitors weren't adopting standards very quickly, would they necessarily lose their "edge" over competitors, considerations of benefitting the market as a whole aside?
Well, one classic example: IBM and the PC market (where standardization helped) vs. Apple and the Mac clones (where standardization almost wiped Apple out).
Here's some more theorizing: I think it would depend on how saturated the market was. If standardization would cause the market to grow such that a smaller percentage of a bigger market was larger than a large percentage of a small market, the company could still benefit from standardization, but they'd also have to diversify in that time so that when saturation approached that they wouldn't get stuck in a commodity market while their competitors could catch up.