Is there merit to what he's saying? What exactly is the value that you'll be providing over the extant competitors? If you've chosen a poor market, why not find a new one?

If on the other hand his criticism is not really constructive, he's not suggesting anything new, and his spark is gone, then the situation is untenable. My experience has been that tolerating "co-founders," "partners," or "early employees" who lack passion for the product just doesn't end well. Get rid of him.