I disagree entirely, for reasons that should be obvious once we examine the actual state of the market at the time. Storage was not the thing that made iPod successful.
The microdrive had existed for several years by then[0][1], developed originally for digital cameras. Like most storage technologies, it was growing in capacity as time went on. I don't think "technology gets marginally better with time" counts as a "tech revolution", nor do I think the microdrive counted as a consumer storage technology that was previously unseen by the time the iPod launched. A physically larger 1.8-inch microdrive (with consequently greater capacity) also does not count as a revolution... it's like making a bigger montor and being surprised that you have more screen real estate.
I also find the anecdote you replied to confusing because surely Apple would have known what a microdrive was before this meeting. That part of the anecdote makes no sense. IBM had their own 1GB microdrive by June of 2000, so even if Apple had exclusive rights to Toshiba's larger 1.8-inch microdrives, that seems entirely irrelevant, contrary to the "key takeaway" that the anecdote posited.
Maybe Apple would have slightly higher storage capacities, but... we're talking about a relatively marginal difference compared to the gulf in storage capacity between these microdrive MP3 players and the flash based MP3 players of the time. An advantage, but not a revolution.
As it turns out, Apple didn't even have a storage capacity advantage[2], in direct contradiction to the anecdote posted upthread.
[0]: https://en.wikipedia.org/wiki/Microdrive