How to determine market saturation

I am a student getting a computer engineering degree, and I have always wanted to develop my own software and sell it, essentially building a startup company

I really don't have much business experience but that's not the purpose of the question. My question is how can I determine if a market is saturated?

I know the best way to come up with ideas is to see a need based on something I do everyday. I have worked a few retail jobs and have considered releasing a Point Of Sale software, and I now work at a company that heavily relies on Microsoft CRM software. I know a lot about both of these software types (POS and CRM) and I feel that given enough time would be able to make my own software in these categories. But How can I determine if these markets are saturated or taken over by other types of software?

Given the current bubble in setting up technology companies and the ease with which new companies can now be set up, there are extremely few verticals you wouldn't apply the word "saturated" to.

Don't let that put you off, however. If you analyse any field, you'd probably rationalise that you've no chance getting a foot-hold. The key issue is what's unique about your offering and does anyone in the market agree that your have something unique (hint - go and ask them).

You do need to distinguish between the financing models in the various market, though. POS software is a fairly capital intensive area with plenty of big players (probably even worse in CRM) in the field able to muscle you out by out-spending you on marketing. In such markets you're more likely to be needing to look down the venture capital route, rather than bootstrapping.

In such a market the usual tactic is to pick a very specific niche and make customer in that niche feel like you're targeting exactly their business-specific needs.