Those people who can determine what people want don't just snap their fingers and pop out an idea. An iterative process is followed to produce that initial product. With your iPod example, a music player which is small, elegant and easy to use [so drop all the extra features the competitors have which nobody uses -- and which features are those?] took a great deal of research to spec out.
I see what you're saying and agree that product development is an iterative process, but without marketing you're depending upon luck getting you to that final result; and you'll run out of cash long before you reach that point.
I couldn't be bothered to buy a condom case either. I also couldn't be arsed to use Twitter but I'm not the target market for either of those products, so both companies would only waste resources if they attempted to match my needs.