Because no one single alternative is vastly superior to it.
Microsoft won the Office wars in the mid 1990s by bundling all the major applications (Word, Excel, Powerpoint, later Outlook and possibly Visio, I don't recall) in a single package that cost less than buying the alternatives (WordPerfect, AmiWord, Lotus123, Quattro, etc.) individually. WordPerfect (the most popular word processing program at the time) got caught flat-footed with the shift from DOS to Windows 3.1, in part due to illegal monopoly actions as alleged in a still ongoing suit by Novell (http://www.sltrib.com/sltrib/money/52577046-79/novell-micros...).
Effectively, Microsoft poisoned the well: individual competitors couldn't outflank it, were starved for cash, and couldn't collaborate on a single alternative. Sucks to play in a proprietary world when the racetrack owner's got a horse in the race.
My own history: I'd previously used a few word processing / text editing tools, including MacWrite, WordPerfect, WordStar, vi, DOS EDIT, EDT, EVE, and AmiPro. I always found Word to be fussy, and during this period started using Linux. I recognized the value in learning a single tool that couldn't be crushed by competition or abandoned by a single vendor, and so returned to vi (as vim) for virtually all my editing, with some fill-ins from Emacs, Lyx, and the odd usage of Abiword (quick letters for postal mail) or OpenOffice/LibreOffice (if I actually have to deal with Microsoft formats). Occasionally Google Docs. And a lot of web forms (most of which go to a spawned vi editor via Vimperator, such as this one). Office97 was the first and last time I really used Microsoft's suite (though I've certainly been exposed to it since), and the less I have to be exposed to it, the better.
What I've mostly found is that text editing suits my needs far better than word processing / DTP. And there are very few compatibility issues.