From my vantage point, on the packed subway cars of the London Underground, I'd say Apple's major competitor isn't who you immediately think of - it's the cellphone companies. Over the last year there's been a noticeable shift among my fellow public transport users from iPods to phones as people look for more (and better) convergence. And phone companies are obliging.
LG, Nokia, Sony Ericsson and more are all pushing music (and photos and movies) as a selling point for their new phones. For a while, I even tried using my Sharp 903 as my sole portable player - I mostly listen to podcasts, so this was definitely a possibility - but the user interface left me cold. If I could find a phone that gave me a decent UI, I'd probably drop my iPod and not look back. (And this is why Apple should get in this market sooner rather than later.) But that's me.
What are you using your iPod for these days, and does it do everything you need it to do? Sound off in the comments.