This is HUGE different between this bus wars and ones from years gone by. The argument that "Lothian expected First to have thrown in the towel after just a few months" is extremely good point. The company hated, public has complained for years for Lothian to come back. If I was lothian and saw all the bad blood and press, add in to the fact all the problems at first etc etc etc I would take a chance.
Ie put some buses on and take all the passengers, Yet somehow First has managed to keep its own throughout this war. To think this is classic bus war is more the fool to yourself.
I'm not entirely sure what you're trying to say (that I'm a fool?), but there's a huge difference between "it was worth Lothian taking a chance in West Lothian" and the "the fact that First have only made a few cuts shows that Lothian have blown it" (as if anyone has actually seen an internal Lothian document that showed they expected First would simply throw in the towel in the first few months).
Put the boot on the other foot for a moment and appreciate how daft it would sound to say "the fact that Lothian haven't pulled out of the Open Top Edinburgh services shows that First have failed" (people are appreciating First for getting foothold in the tourist market and denting Lothian's profits but acting as if the Lothian actions haven't hit First's profits in WL)
West Lothian looked like a reasonable place for Lothian to expand to (especially with the tram taking a chunk of the "city" bus network). Personally, I'd have just focussed on the St Johns/Livingston - Edinburgh market (forget about local services within WL, forget about long journeys all the way to Fauldhouse/ Armadale, forget about trying to compete on every corridor)... introduce three or four routes (e.g. City via A8, City via A71, a route via the A8 to the Airport/Gyle, a route via the A71 to Edinburgh Park/ Herriot Watt), integrated into the "city" network, maybe use routes like the X25 as a springboard to extend westwards so that they have established passengers from day one).
In hindsight, maybe Lothian picked a bad time to start up, given that First had finally simplified/shrunk their network down to a pretty lean/efficient operation, a fleet of modern buses etc - rather than the unfocussed/flabby operations run by ancient vehicles in East Lothian/ Midlothian that LRT were able to dominate.
But they must have had a medium term plan - probably not expecting to be profitable in six months or even twelve months, but gaining enough market share (just like they won't have expected a "new" service in Edinburgh like the 200 to be chock-full from day one). However, as nobody on here is privy to that information, there's just been a lot of hype about how certain people think it's gone - truly none of us know how many passengers Lothian need to break even, how many they are expecting to have after six months of each service operating, whether their plans are ahead/behind schedule.
They are certainly doing a comprehensive job of competition - a seven day operation, running early and late plus night buses - normally competition in the UK is only 08:00-18:00 five or six days a week! That comes at quite a cost - seems a bit too ambitious for me, but Lothian seem to be aiming high, not going low market - presumably that's an indication that they are in it for the long haul (rather than a smash and grab operation intended to last a few weeks until First raised the white flag and surrendered, after which Lothian would double fares).
(also, worth pointing out that the "traditional" frequency on the 26 corridor was eight buses an hour - four 26s, two 85s and two 86s - the increase to twelve buses per hour was when the four 15s per hour through Portobello were replaced by a half hourly 15 that ran via Northfield Broadway and the 69s were scrapped at the Corstorphine end IIRC around the millennium - i.e. the increase in the 26s was to replace other services - the fact that Portobello has since gained the 45 and 124 means that they are still twelve buses per hour on that section of route)