I wish Apple the best of luck with this iPod stuff. It seems that whenever a company jumps into the business of making mass market electronic devices they eventually get creamed by low cost producers. I can't see how this will pan out any differently.
Normally I would agree with this statement ... and it may be true of the iPod Shuffle. But the regular iPod's amazing feature is the iPod wheel. It is truly innovative and allows for one hand operation. As Steve Jobs has been know to say, "it's insanely great".
I think Apple will retain its edge on the regular iPod. Apple will always be a problem for those who just don't want to pay the extra amount of money for innovative features and cutting edge industrial design.
I think you'll agree that even when buying a toaster there are people who set out to buy qualiity and a good looking appliance and others who buy the least expensive toaster that does the job.