The iPod is such an insane ripoff that I have been laughing at iPod owners for ages now. I mean seriously...
But first... AbelIAN. What happens when you have to format, or fdisk, as seems to be relatively frequently required when running an M$ OS? 5 computers may not be enough. And then to say "if you own more than 5 then you must be rich enough". Excuse the he!! out of me? Who made you the person to be so snobbish as to say "Oh, well you can afford to pay more, so SCREW YOU." It always drives me nuts when people take that attitude because 1) they are often wrong (I own about 7 right now and I most assuredly do not, I just fix old ones and find workable uses for them), and 2) who are you to tell someone "you can pay more FOR THE SAME SERVICE I GET since you make more"? Talk about wealth distribution...
Now, as for the cost... I'm sorry, but $0.99 is an abjact ripoff. Figure 15 songs average on a CD, or even 12, you can buy most new CDs for less than that, especially if you shop at Walmart. But, setting that aside... what about used CD stores? You can go in there and get most CDs for under $6 each, quite often. Then you can take that CD home, rip it, and have the whole thing for the equivalent of less than $0.50 per song, and NO DRM!
And they wonder why online music purchases aren't catching on like the RIAA hopes... I mean if nothing else I could see charging that INSANE premium of $0.99 per song for the first what, 6 months, after a song is released, but after that you'd BETTER find a way to compete against $0.50.
And then you look at the insane costs of the iPods... like the 60 GB video that someone mentioned. Holy crap, you can get such an awesome Archos for that. Or, if you are already pre-disposed to spending so much for a player, just $100 more can get you a portable DVR.
I mean, when you compare the players that are out there to the iPod, the iPod just seems like an overpriced brick. You just have to be willing to look outside of the spoonfed world of Apple and brand recognition. That is really all that Apple has going for it. People just see all the advertising, go to the store, and think "hey, I know what that is".
As for Apple's business model, their business model has always been PR and cash at the expense of the customer. With iPod it is insane restrictions and overpriced hardware/songs. Just like with their computers, it was inferior parts for too much $$$. Actually, that was the funniest thing about their transition to Intel chips. For years they had been saying PPC is better and Intel is slow, then they start saying that they are switching to Intel as they are better, while at the same time still having all the stuff on their website pointing out how PPC was faster and better. It was hilarious, because either they were telling the truth on their website or in their new press releases. Which was it? Oh, but not just any Intel, no... we're going to make them lock the hardware and FORCE you to buy it through us.
And the Apple fanboys put up with that. But yes, as Asphix20 said, isn't that the same garbate that everyone is angry with M$ for forcing on us?