I agree that the iPod classic is a product separate from those of other categories. Additionally, I agree with your views regarding being amazed about not having large-storage HDD-based music players. However, the following situation occurred recently to me:
- I got a new phone (replacing the 4 year old one).
- I uploaded all of my music on my iPod (40ish Gb) to Google Music (20,000 songs for free)
- I cached my frequently-played favorites ("Running mix", "Workout mix", "Yard Word mix") on the HD of the phone, using about 1 Gb of space
- I stream my music collection from Google Music
- I also have many other capabilities, such as streaming from Pandora, downloading podcasts, using car stereo BlueTooth, etc.
- I haven't turned on my iPod since
I have 'unlimited' (5 Gb) bandwidth from my cell carrier when roaming, and truely 'unlimited' bandwidth from the places where I listen to the most music (gym Wifi, home Wifi, work wifi, girlfriend Wifi, etc.). In short, my phone has access to my entire music collection as part of its normal operation ($25/month, unlimited calls/data).
I use a Moto X phone (now), from Republic Wireless, which cost $299 (https://republicwireless.com/phones/moto-x), and $25/month. It effectively replaces the functionality of my previous phone ($50/month, free phone).
An iPod Classic (40K songs) starts at $249 (http://www.apple.com/ipodclassic/). An iPod Touch (1750-7K songs) starts at $229.
iPods are products which will die.
PS - Shameless plug for a company with which I am happy. You can switch to Republic Wireless using this link for the first month free: http://rwshar.es/OWQc