Don't worry about the number of results, look at the links in the top 10 (where you are aiming for!) as these are most important.
When you do a search, Google starts by showing the most relevant results, and then pads out the results with less and less relevant results.
So although you are getting 10.5 million results showing, for a niche area you may only have 50 results which are actually highly relevant, and so these would be your direct "competition". It's very very rare that you get a very low number of results.
So don't worry about the number of actual results, its largely irrelevant. Look at each of the sites in the top 10, at the quality of the page and the
PR values. Before everyone jumps on me and says
PR isn't relevant, I know that, but from my experience if all the sites have a decent
PR (4 or over), then it's hard to break in. If you have a number of 0 -2
PR's in the top 10, then you should be able to outrank them.
Other factors i`ve gained from experience are:
If theres a BBC link at the top, you aren't going to be able to beat that, and it indicates the area may not be as much of a niche as you think, so can be harder to break in.
If there are Amazon or Ebay links in the top 10, then it should be pretty easy to break in to the top 10 and displace these.
When you are working at this niche level, it's vital to get a domain that matches the key phrase you are targetting, and the words must be in the same order. Optimise the
SEO of the site to match this key phrase, get to a position you're happy with, and then you can start targetting other key phrases.
If I were you I would not worry about the number of results, and just go for it. Sometimes you are spot on and get to number 1, other times you will be lower down the rankings (although time plays a big factor for these, and you should move up after a couple of months).
After you get a number of sites online and see what rankings they get, you begin to get an instinctive feel as to whether you can get into the top 10 for an area. This plays a big part in deciding whether to launch a site or not. However, this isn't really something that can be taught, as so many areas are so different, it only comes through practice.
As the others have said, with domain names and hosting so cheap, even if you make a mistake you've lost very little - just move on and try something else.