Hi, Johnny,
Hyde submitted two guns to the submachine gun trials; the first, called the Hyde M35 was a failure, but the Hyde-Inland Model 1, was adopted as the SMG, M2, so technically it wasn't "beaten out". Nor was Hyde, who, along with Frederick Sampson of General Motors, designed the M3. (The SMG M1 was the simplified version of the Thompson, without the Blish lock, but still with the hammer and separate firing pin; the SMG M1A1 had a stub firing pin in the bolt face, like the M3 and the STEN.)
But, as you can see from the carbine pictures, Hyde was basically a designer of the old school, blue steel and polished walnut. His stuff was all forged and machined, and pretty reliable, but also heavy and very expensive to make and maintain. I suspect it took a lot of head-knocking by Col Studler to get him to work on a gun like the M3, but the result was worth it.
Even before production began, the M2 was declared substitute standard but it was still produced by Marlin, if only in limited quantity. (I don't know how many were made.) The first production guns did not reach Aberdeen for further testing until April or May 1943, five or six months after the M3 had been adopted and was in production.
Jim