Not quite true. There were MP3 players before the ipod. The nomad was popular before the ipod came out. Wikipedia tells me the first mp3 player came out in 1996, 5 years before the ipod. The ipod didn't become popular until it was compatible with windows, which is kind of funny. By that time you could get cellphones that could play MP3's which is why I never had the need for an ipod.
I still have a feeling that the ipod got popular by luck of the draw, with it having a catchy name also helped. Then you had these people who loved their ipods, and now they just had to get the newest ipod that could make phone calls. There were cellphones that were better than the iphone before it came out too in a lot of ways, but the iphone no doubt had that strong combination of a)a good touch screen b) an easy to navigate app store. Then you had itunes, which was marketing genius to force it onto ipod users.
After all that, how does apple sit in the world today? Still second to PC's, and they have been 2nd to Android for a while now. Now with Steve Jobs gone, it will be interesting to see what happens.