There's a he'll of a difference between building a prototype and building a commercial product. Microsoft were trying to push tablets for years with very little success. Apple realised that to make a tablet work, you couldn't stick a desktop OS on it. Apple have always been about making things accessible to your average Jo, to Mum and Dad. So while Ceative were adding features and gimmicks to their music players, Apple focused on making them easy to use.
The public clearly see Apples products as innovative, they keep getting their wallets out and buying Apples products.
Apple is good for the tech industry, they help drive the market forward, do you really think we'd have seen the Galaxy tab if it wasn't for the iPad?