I think WordPress, wikis and Google (Docs) would disagree with you about word processing being a solved problem. And they seem to do well enough. They offer a fundamentally different notion of what you're trying to do when you're putting prose down. (Personally I hate these systems like Microsoft Word and Google Docs that force you to think in terms of a page. Especially because they don't give you any tools to actually make things lay out properly. But it's okay, because people have been fundamentally rethinking the issue for years now.)

Now if you do want page layout, I think the people who like to do that use something different — not Word. So I don't think they've really cornered any market, unless the market is people who want to use Word.