I do not have an MP3 player, but I do have a capable phone I love (a Nokia 3650) and a handheld PC (A Dell Axim X50V). I know that the iPod (and certainly the iPhone) will be the status symbols that all the cool kids must have. I also know that the Microsoft Zune has been an undeniable flop, and that Microsoft has similarly abandoned the Pocket PC platform in pursuit of the Smartphone.
Microsoft could grab some marketshare, with a minimum of work, if they could do a massive paradign shift…
…and embrace opensource.
My dream device would have decent battery life, cellular/WiFi/Bluetooth, a decent screen, and stereo audio. In different variations, based on the manufacturer, these things can exist in a handheld device. Top it off with a sexy GUI and you have a killer (note how agressive Apple was in protecting their IP when a themer released an iPhone-flavored theme for PocketPC devices).
Same thing with the Zune – kill the DRM and dreams of vertical integration and make money off of hardware and not services.
Take the software opensource, and let the fanboys take off. You'd have instant cred' and make the Linux devotees scratch their heads in awe. Other than sexy design and fabulous UIs (think about user experience) Apple hardware is meh.
If anything, Apple is as much the evil empire as Microsoft – but where Microsoft monopolizes the software (along with DRM), Apple restricts your choice via hardware (and DRM).
Focusing on the things people interact with, notably the external design and interface can do wonders.