Not necessarily... If I said MS-Word, would you decide to go out and create a word processor, probably not since the market is pretty much a done deal.
I get what you mean, but why not? Having a well-established, dominant player doesn't mean there's no opportunity to make a living solving similar problems. "Word" is a huge target, it covers so many use cases that it's possible to focus on a few of them and provide a tailored solution that enough people find valuable. This was the status quo when Google Docs was being developed as well, and OpenOffice for that matter.