Why hasn't someone carved out a word processor for writers? Niche-ish market (though I'm sure the wannabe segment would help), and (I imagine) quite a big coding effort.

Except they have - almost. Scrivener is almost there — Scrivener 2 will be even closer — though the developer is always careful to say that his product is not a full-blown wp. There are numerous other tools on Windows and the Mac that are padding along behind or in certain ways closer still.

I'm no expert but I think what seems to defeat them all are two-and-a-half issues: not surprisingly, the production of a proper Word clone document as required by agents and publishers (potentially much harder for non-fiction than fiction, when footnotes, indexes, images and what-not may be involved), and as, David explains above, the revise process. The requirement for "round-tripping" in Word format seems particularly difficult. Specifically, I haven't come across any wp that can handle "Track changes" like Word can. Perhaps it involves complexities of coding that smaller developers cannot manage yet. Scrivener 3 perhaps.