From what I remember, the iPod was never the first or only MP3 player, not even the first hard drive-based iPod. It's just the only one that was any kind of easy to use at the time. Possibly the iPod nano which ultimately became the most popular model was the first to have largish amounts of flash memory instead of a hard drive, in a unit with a bright color screen.

What made the iPod popular originally is that every other interface sucked. Now that it dominates, it keeps a finely cultivated and marketed image, sure. Some might say that other products have caught up, I don't really know not having spent a lot of time using the latest ones. (I've used a couple year old Sandisk that definitely doesn't measure up.) But it doesn't matter so far because for the moment the iPod is still perceived as it, and the only people who don't want one seem to be those that care about a certain specific feature over usability and/or style (the same reason someone would not choose a Mac computer) or those who want to be anti-establishment (the *opposite* reason vs the computer business).