I don't believe a traditional 'Open-source' item could beat the ipod. (I think The Iphone and G1 will kill the ipod). The market has started to become modular, and us such 'good-enough' products will slowly eat away at the ipod, for a firm (opensource or otherwise) there needs to be a design-led core team to make decisions, to get working capital to manufacture, distribute, market etc (like mechanical_fish suggested). Regarding the average consumer arguement, to an average consumer an ipod has become synonymous to a mp3 player, and as more and more generic 'ipods' flood the market apple will probably leave the market.