Scale fidelity in three rail O gauge began with Williams, Right of Way, and others, but not a full range of products as MTH, and then K-Line, Lionel and Weaver produced in the last 25-30 years.
MTH became a big factor in the hobby between about 1995-2005. Some estimates suggest their dollar volume sales may have exceeded Lionel's in the late 1990s, for example. Before MTH became a major competitor and innovator, Neil Young and Dick Kughn were already working on pushing the envelope of command control and sound quality. TMCC and Railsounds debuted in 1995-1996. MTH was making progress in the marketplace, but still restricted to a distinctly annoying (to me) and inferior control system modified from QSI which they called PS1. A true kludge, in my view, in terms of operational ease and sound quality. Activating features required tiresome and unreliable pumping of the transformer handle. A standing joke amongst those who were using TMCC, the first commercially available command system in three rail O gauge.
So innovation and features weren't as one sided as some seem to believe. If you were operating only conventional during 1996-2002, MTH was equivalent and sometimes superior to Lionel for some issues, but definitely not ease of use, sound features, command capability, speed control, sound quality and reliability due to the peculiarities of PS1. If the battery went dead with PS1, you were in a pickle, sometimes requiring a dealer's intervention. PS1 was not compatible with some solid state transformers. It was only happy with pure sine wave transformers, mostly from the postwar era. The main operating electronics of PS1 could get fouled up under certain circumstances, requiring reprogramming with a special reset chip which did not come with each locomotive. Some folks loved and still love PS1, but not the many of us for whom command control (TMCC) was a wonderful innovation.
It wasn't until 2002 that MTH's DCS came out to control PS2 locos that started being made in 2000. Many folks found DCS considerably less easy to use and predictable than TMCC. So it wasn't all successes for MTH. For various reasons, things actually started to go south for their role in marketplace in the mid-2000s. Lionel, whose leadership had been seriously challenged, regained some of that role with Legacy and improved scale features of appearance. For all the criticisms launched at Lionel during 1995-2024, they are the last full line manufacturer standing, so they must have been doing something right all along.
MTH made some great contributions to the hobby to be sure, but is presently a shadow of its former self. It's not clear to me how future development of DCS/PS3 will occur, for one important issue. What happens when Andy Edleman, Rich Foster and Dave Kriebehl retire? Is Atlas going to be the phoenix that revitalizes the MTH product line? History is rarely as simple as it seems. I haven't mentioned the lawsuits and other distractions and waste of resources that occurred during the period of 1995-2005.
You want a train set for your friend, child or grandchild today? Your choices right now are Lionel LionChief and not much else in three rail O gauge.