Everybody wants a piece of Apple pie. Creative tried, but the price was high and yet they have just bought themselves a small piece and it tasted sour, slightly less sour than a $200M hit. Sony did try, after all they INVENTED the Walkman segment, and thank goodness they decided to concentrate more on the highly successful MP3 Phones instead.
Now Sandisk wants a try. Strangely, they are trying using nothing more sophisticated than evolutionary styling changes, giving a `cool' name (sansa??? Come on!) and hitting on the old price-performance argument.
Innovation is definitely necessary to survive in the MP3 arena, but after watching Apple and reluctantly cheering them on for years, I think the crucial areas where innovation breeds maximum returns, is the `usage paradigm' and `radical design' aread. Apple has consistently innovated in these areas spot on, and kept the successful innovations - their touchpad rotating selector system was incredible and until now hardly duplicated, their iTunes radically destroyed the folder paradigm in favour of the playlist paradigm, and each new design coming out from Apple, though so much more infrequent than its competitors, drew a WOW from all because of its radical nature. Somehow, it was also important that Apple maintained product stability by not offering too many models and model design changes.
As long as competitors do not take into consideration and address Apple's strengths, they won't get apple pie.