I think you are arguing from a social/holistic point of view.Yes with more competition society benefits as a whole and we get better products since the bar is set higher.
If you are arguing from the point of view of huge companies like IBM or Apple then Yes - being in a more competitive market makes sense as larger markets are inherently competitive.
But from the point of view someone without money,resources and who wants to start a business from scratch, it seems obvious to me that avoiding competition is a good strategy.
For example, read the story about competing pizza shops in Manhattan.Although they work hard and are doing their best, they aren't making much money.