Seems like he is doing well. Be encouraging and positive toward him and his tennis game. You can't coach him since you don't know tennis well (also, it sometimes isn't a good idea to have parents coach). All you can do is make sure he does what the coach tells him to do.
Remember, that how a player looks hitting the ball doesn't determine who wins. The second player also had to defeat another player in the first round, so despite the way things looked, he wasn't a bad player. It can be more difficult to play against someone who doesn't put the ball where you expect it.
As far as your son giving up early, that is something that should be overcome with experience. Let the coach know what happened (if he wasn't at the match) and let him give advice on how to overcome it.