99% of people who buy iPods don't realize several simple things ...
iPod doesn't mean MP3 player. Even though most people use the term iPod interchangeably to mean MP3 player, iPods are only a brand of MP3 players. Unfortunately, iPod is now a term like Band-Aid or Kleenex. (My wife is often asking me where my iPod is, even though I have an iRiver.)
You can't get music anywhere with your iPod. With an iPod, you have to use iTunes for your music service. For external audio files not in iTunes, you have to import the file into iTunes to add them to your iPod.
Other MP3 players are comparable and less expensive, and they're selling well. In the Nov 28 New York Times Tech Talk podcast, the reviewers mention the iRiver Clicks, Sansa View, Creative Zen Vision, and Archos as all good alternatives to the iPod Touch.
The type of device matters less than the content on it. It's not so much about the hardware at all -- it's about the content you put on it. In the same NYTimes Tech Talk podcast, the reviewers assert that "content is the king for all of this stuff. Hardware isn't necessarily the big thing. It is what you're going to be playing on it...." Service providers are becoming more player-agnostic.
You aren't limited to just music in your iPod. I rarely listen to music on my MP3 player. Pandora, Yahoo Music, and dozens of other online music sites provide all the music I need. Instead, my MP3 player is full of podcasts. Even though it's an old iRiver (without video) and only half a gig of memory, I probably listen to more podcasts than most.
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I'm a technical writer based in the California San Francisco Bay area. Topics I write about on this blog include technical writing, authoring and publishing tools, API documentation, tech comm trends, visual communication, technical writing career advice, information architecture and findability, developer documentation, and more. If you're a professional or aspiring technical writer, be sure to subscribe to email updates using the form above. You can learn more about me here. You can also contact me with questions.