I never knew someone had an MP3 player camera. Weird... I guess I can see the utility in it, but wow... Yeah, I thought MP3 would be a slow growth fad, but saw where it could have some popularity. And now, after the iPod, everything Apple, pretty much, plays MP3s. I thought the first iPod was a disaster, having that physically spinning disc for a control. I saw it as a 'dust magnet', and a problem when it got junked up. And yet the iPod ruled the world for quite a long time.
I get the audio deficiencies of the MP3 music files, but since at the time I was flying a lot, I didn't care. I plugged my Bose QC's into my iPod, and drowned out the screaming kids, and chatty seat mates. 100% fidelity, or even, what, 80% fidelity is kind of overkill. *shrug*
I loved the guy that tried to put 100% accurate files on an MP3 player. He got, what, 6? And it took them a lot of time to get that in it. Tradeoffs... So much of life is about tradeoffs...
It kind of makes sense in some ways-- some of the most common uses of iPhone are probably the camera and music player, but now with the communications and more interactive display added in. At the time though, the small storage available on the storage cards just didn't quite deliver on the promise.
Travel is what sold me on the iPod, frankly. 1000 songs in your pocket, was compelling. The 40i though only had limited storage, so it probably held less than a CD (if you wanted room for photos) but with much less fidelity. I think iPod stepped up bit rate and made audio reproduction a priority whereas this Fujifilm camera probably did not and had storage measured in GB rather than MB. The benefits started to outweigh the drawbacks.
And it's just continued to get better from there, obviously.
As a point and shoot though, Fujifilm did a great job and then an even better job with the F700.