I certainly thought this back in 2012 when Apple started designing their own mobile CPU cores. How could Apple compete with ARM's designs which would have much greater economies of scale or with Qualcomm who would be shipping way more units than Apple? More than a decade later and it's proven to be a durable competitive advantage.
I would point out that Apple had no first mover advantage with the iPhone. Apple was using standard ARM cores for the first 5 years. It's not like ARM didn't have a multi-decade head start on Apple designing ARM cores.
There are certainly risks, but so far it looks like Apple is making the right decision. Intel and AMD are mostly still targeting a higher power/thermal level than Apple is looking for. Apple likes being able to run things without relying on an external GPU. Having the ability to design things themselves means they're able to make what is most important to their users.
With Intel, Apple was always at the whims of what Intel wanted to produce. It took forever to get the 1038NG7 28W part from Intel which meant that Apple couldn't offer a 13" laptop with the speed that a lot of users wanted. It also meant that they were beholden to crappy Intel graphics - even as they paid up for the Iris graphics.
With their own CPUs, their destiny is in their hands. It's worked extremely well for the iPhone and it's working well for their Macs too.
One of the things to remember: Apple already needs to design these cores for their iPhones and iPads. Once you're doing that, it makes a certain amount of sense to re-use those core designs for the Macs. It isn't zero effort, but they aren't starting from scratch.
I'd also note that Apple tends to do less than a lot of companies and the same applies to their processors. Intel, AMD, and Qualcomm are trying to make parts for a huge range of devices. Apple has a much narrower field of products. While Qualcomm is trying to create processors for $100 cheap phones, Apple just goes with a single CPU for its mobile devices (sometimes using last year's CPU for some devices). With the Mac, Apple has a little more variety, but it's still pretty constrained. An M Ultra is basically just two M Maxes put together. Most of the time, the design is basically the same and Apple has just changed the core count or something like that.
Will Apple compete with Nvidia's GPUs? Probably not, but an M2 Ultra is competing with an Nvidia RTX 3070 desktop GPU. Sure, that's not the current generation or Nvidia's highest spec, but it's still good - and OpenCL isn't great on Mac so it isn't even a fair test. The new M3s have much upgraded graphics and it'll be interesting to see how well they do.
You can say it has never worked before, but I think that might ignore a few things. First, one of the reasons that Intel came to dominate things is because everyone who tried to vertically integrate their processors tried to charge too much. Regardless of what you think of Apple's pricing, they aren't charging more for the privilege of their M processors than they were for their Intel ones. I think it also ignores the fact that Apple has so much money. Finally, in terms of cores shipped in the segments that Apple is shipping them, they're huge. ARM isn't shipping many X-series cores (their top performance cores). They're mostly shipping lower spec'd cores. There aren't a ton of flagship Android phones being sold. Intel is mostly shipping lower-end laptop CPUs destined for machines in the $400-800 range, server CPUs, etc. Apple has a lot of scale for the cores it is designing.
There is risk, but Apple took that risk a decade ago with their iPhone CPUs and they've had a great advantage there. While Intel and others are looking to revitalize their CPU game, it seems like they're doing it at a higher thermal/power level than Apple is looking for - and trying to benchmark themselves against Apple parts at a fraction of the power. Apple is getting to design parts that do what they need and they've proven that they can beat the industry for more than a decade. I'd say it was the right decision to move to Apple Silicon for Macs.