People harp on that line, but in retrospect it was spot on. First generation iPods were slow sellers and little more than a novelty/fashion accessory.

Remember that when it came out the killer feature (iTunes Music Store) was still 2 years and two hardware revisions away. What you had was a very expensive player that tethered you to a Mac if you wanted to load music.

That said, it had a significantly better user experience than contemporary competitors, but that's mostly because MP3 players back in 2001 were universally horrible. People sold devices with 8 Megabytes of storage for the music, and horrible DRM laden monstrosities for managing the music (see: Sony) that made them just miserable.

The iPod had basically 2 big wins: It had enough capacity to store a reasonable amount of music and a well designed interface. Certainly nice, but not enough to make your average person shell out the $400 Apple demanded for one.

The iPod wasn't a huge hit until the price came down and the iTunes Music Store gave people an easy way to get music for it.