I think many people are failing to understand the true nature of iTunes dominance because we're all technically astute / power users.
Normal, non-technical users want one way of doing things, and once they learn how it works, they stick to it. If you took your average (non-geek) ipod owner and told them to copy mp3s to their ipod without using itunes, by simply dragging and dropping them into the ipod drive using a file manager, I can absolutely guarantee most wouldn't have a clue how to do it. (Believe me, I'm in tech support, you won't believe how little proficiency most people have with the very basics of using a computer)
The point being, most people who've ever bought an mp3 player bought an ipod (just look at the sales figures.) Because they bought an ipod, they use itunes.
In their minds, you need itunes to get music onto your mp3 player. You could explain that you can do it just as easily with other software, but why should they? They know how to use itunes, why change? In fact, most users are afraid to change.
That wouldn't be a problem, if other hardware devices could use itunes too. But they can't.
So we have a situation where if you want to make an mp3 player, you'll be at a major disadvantage trying to sell it because it won't work with itunes, which is what most people want, no, NEED to use.
So what's so wrong about that? It's Apple's software, they can do what they want.
Well, not according to the DOJ and the EU.
They told MS they couldn't use the fact that most people who buy computers want to use Windows on them to force users to use Internet Explorer as the web browser.
In other words, to spell it out: Just because it's your software, doesn't mean you can do what you like with it. As soon as you're the dominant player in the market (Which ipod / itunes is, by miles), then that becomes illegal because it's anti-competitive.
It wasn't Microsoft's fault they were the dominant desktop OS. They worked hard and spent billions of dollars to achieve that. BUT the DoJ still stopped them from doing what they wanted with their own software.
It's not Apple's fault they're dominant in the mp3 market. They spent billions of dollars to achieve that. BUT... etc.