I'm currently working on a startup, and while our market isn't crowded by any means, I think having a few strong competitors puts us in a better position - they've made the mistakes so we don't have to.

Each competitor I see certainly nudges the bar higher, but it's only a nudge. Ultimately, we're all building web applications. They're just code, markup and javascript. The great thing about the web is that the entry requirements are very low and your competitors, no matter how strong, can never raise those requirements.

FWIW, my startup is testled.com. Our competitors are people like userfly.com, clicktale.com etc.