> but the marketing, polish, and IMO most importantly, that they had a real software company
I think it is important to remember that when the iPod came out, iTunes already existed. Not the iTunes store, mind you, but iTunes as a solution to (legally) rip your existing CDs (and automatically get the tags/meta-information from OCDDB or so), and manage songs downloaded from Napster (less legally).
So, people had a good platform to listen to music on the desktop, nicely managed with lots of meta-information (tags, time last played, rankings, etc).
Now, with the iPod, you could JUST PLUG IT IN, and it would download the whole shebang within a couple of minutes (via Firewire), and offer it in a nice interface. THAT was a quantum leap in usability compared with all other devices on the market at the time.
I had a minidisk player, and you could add artist and song titles manually on the device (selecting a letter at a time with a left/right cursor), and my, what a pain it was.
Just having your whole (carefully curated) music library on the go in a a few minutes on the iPod was AWESOME.