Software niche and piracy?

I've been doing some research into a software niche that I know a lot about and have been doing some competitor research on Google (as described in BIP2 session 1).

Looking at the main keywords for the name of the software product I find that there are 2,860,000 results in Google and most of the paid search competitors are vendors. So I started thinking either:

(a) this is a good niche as there's no affiliate competition
(b) this is a bad niche as there's no affiliate competition and perhaps it's difficult to monetise.

I then checked in Google's Adword tool to see if people are searching for it and there seems to be around 33,000 searchs for the main keyword per month. The thing that worries me though is that a lot of the keyword searches started looking like this:

keyword serial generator
keyword torrent
keyword crack
etc.

As it's a premium piece of software (approx £279.00 / $499) it's obviously being pirated a lot.

So my questions are:

1. How do you determine if a niche is good based on the fact there's little affiliate competition?
2. Is software a difficult market to get into, given that people are often looking to get pirated versions of it?

Anyone with any experience or insight care to comment?

Thanks,
Marc

P.S. Loving BIP2's more hands-on approach Jeremy!