The iPod competes with flash-based players and is priced attractively when compared against the competition. It doesn't use a 2.5" laptop drive. In fact, the 1.8" PC-card drive it uses retails for the same amount Apple sell the iPod.
Someone has already released beta Windows software that allows syncing to the iPod. It is speculated that Apple will announce Windows support at Macworld. The iPod is exactly as proprietary as it needs to be, in the same way the empeg is. It only works with custom software and that software is developed first for the markets the parent company is familiar with and feels would yield the most profit. If after using an empeg, you think you'd still have a nice time using a unit based solely on directory structure, give one a try. I guarantee you that you'll get sick of the Nomad or Archos in no time flat.
Apple's strategy for the iPod was also to push Mac sales, not just to have the coolest and most saught portable player. They must have done something right because people are buying them like mad. Some folks are buying Apple laptops along with them, when they were previously in the market for less costly Dells, etc.
I'm keeping my fingers crossed that SB's new device follows the database paradigm and is not reliant on some simple microcode to navigate a native FAT.
Bruno