I've been observing the DAP market as a business major these past few years and in some areas I agree with that article, but I'd like to add some more specifics. Before the iPod came out, DAPs were mostly flash based players and as a result they were much more smaller as well as being cheaper. I think Apple's success made it easier to justify a larger sized DAP and it's premium price. Remember that the first two generations of the iPods were not so successful and even the third generation became popular close to the end of it's lifespan.
It still amaze me to think that it's been a little more than a year ago that a geeky, "relatively" large and "then" very exensive DAP became such a benchmark in a matter of months. Now in 2005, $300 is the norm price for a DAP and this really opened the door for other DAP makers as well.
Two things that concern me now is that there is no particular reason why the iPod is so successful and therefore this could potentially become a DAP bubble, especially since many people are reluctant to replace their iPods as they use only a fraction of it's capacity (generally speaking). Another is that Apple suddenly lost it's innovative touch with the iPod line and reverted to making things cheaper rather than introducing new ideas. Thus far, Apple stopped building anything new since the first iPod mini. They were late to introduce a photo version, seriously late to introduce a video version, the 2nd gen iPod mini is pratically identical to it's predecessor and the iPod shuffle looks and feels retro. Surprisingly, the iPod misses out in some fundamentals like sound quality. Whats more, they seem to have lost their innovative touch to iRiver and Cowon as well as Sony. I think the market still has potential for an even more premium player as seen with the 60gb iPod and Samsung's diamond studded YP-W3. Apple could use their popularity to move their ipod line further up the scale from the mainstream and make them premium DAPs which they originally were, maybe an audiophile version as well, but it looks like they are going in the opposite direction and put themselves where they are less competitive, not because they make bad players but because some of the competition are simply better.
IMO even simple modifications like better sound quality will really shut the door from the competition.