I would think that Apple realizes that the commoditization of the iPod is inevitable. In my opinion, this is one of the reasons that iTunes works only with their player and is one of the reasons that will be able to sell a commodity product for a value-added price. Think about it. If you buy 1000 songs from the iTunes store over a five-year period, you have way more invested in your portable music than just the cost of the iPod. You also have $990 of music that won't play on any other MP3 player. Perhaps someone will come up with some sort of work-around that will enable you to move your music to another type of player, but as an Apple stockholder I am not interested in cheating the company out of any potential revenue since that only hurts my stock price in the long run. I happen to believe that the iPod of five years from now will be radically different from what is now state of the art as Apple continues to improve the product.
How Much Cheaper Is the iPod Going to Get?