The competiton could make AAC players, but because Apple is still not licensing Fairplay, none of these players could play iTunes content. Apple has complete control of it. The competiton would have to develop their own rights-managed AAC if they wanted to use AAC, or have them be license-free, which won't happen of course.
Since I'm an Apple fan, I don't care at all if it's proprietery or not. Kudos to them. They have the best player, the best overall experience anyway. If you don't like it, buy something else. Go away.
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Side topic. What are the latest rules on iTunes songs on multiple machines and ipods? I was thinking of grabbing a shuffle or two, but if my library will only play on one iPod, that's going to kind of kill things.