When starting a startup, we shouldn't worry about if there's room in a particular market or not. If we're solving a problem, there's always room. Who would have thought google would become the biggest software company in the world. Software moves to the web, and google is the leader in that world. Almost everyone uses goog applications in one way or another. When our startup is in the idea stage, many companies can emerge into our market, and we wouldn't have time to track all of them down.
If we have a competitive advantage, there's always room. We don't start a startup to be 20% better than the competitors; we start a startup to be 20 times better than the competitors. When goog started, there were excite, lycos, aliweb, altavista, webcrawler..., but goog came in and kick ass. If we have to know something about our market, make sure we know if the market is new, or declining.
Trust me, if we're solving a problem, and we have competitive advantage, there's plenty of room.