Three things could happen --
A)someone could come up with a really innovative system that blows the iPod away.
B)The Chicoms decide to dump several hundred freighters filled with cheap players into the U.S. market.
C)There's a massive technological convergence in which EVERY device becomes a player, i.e. phones, PDAs, watches, etc. etc. with the features and memory that people want.
A I mentioned. B is a different market, cheap players, which will never be "in." C is already happening, but as usual mixed-function devices aren't as good as dedicated devices (I have a Cell/Palm, and it isn't great as either).
I don't think anyone will take over as long as Apple keeps raising the bar.
There is one other thing not related to the device itself -- a massive market shift of where people get their online music to someplace that locks out the iPod.