Dell has dropped out of the MP3 music player market as another casualty of the iPod juggernaut. The iPod has, as I predicted, become a platform, because it does much more than play music.
With the very first iPod model, Apple established an external interface that allowed third party manufacturers to make add-on gadgets, like a BMW or a stereo with an iPod plug. No other manufacturer has been able to establish a similar third party add-on market, and the iPod add-on market is conservatively valued at over half a billion dollars in annual sales. It would be much more than that if you counted automobiles as an "add-on."
Apple has also consistently increased the functionality of the iPod with its ability to store notes, calendar items, play games, store and view pictures, and store and play videos. No other manufacturer has come close. With the sneaker interface that communicates wirelessly with an iPod to show exercise stats, Apple has raised the bar even higher, and the somewhat indulgent sneaker-net only hints at what will likely be a flood of new wireless devices that use the iPod as the interface. Many pundits predict that the external wireless widget that now plugs into the bottom of an iPod to add the wireless functionality will appear as an internal feature in the next revision of the iPod, and that would be my guess as well. Once that happens, it will make it much easier and less expensive to design and sell iPod wireless gadgets.
If Apple ever comes out with an iPod cellphone, expect to hear a collective shriek of despair from cellphone makers all over the world.