Take for example the iPhone or even the iPod, what killer feature makes them head and shoulders above the competition?
Not one thing. Not even cheaper.
It's just cooler. Whatever that is? Sounds like plain older marketing to me.
I'm going to disagree. You're comparing them with other products on quantifiable terms, not qualative ones. Apple's iPod took the MP3 player and turned it into a product which "doesn't suck". The user interface is simple and effective, it's iconic. And they're trying the same thing with the iPhone. The only way Apple can compete with Micro-"good enough"-soft is with a far superior product.
After all, since when did the Zune win any design awards?
..Not that I'm an Apple fan, I don't own a single Apple product, but I feel Microsoft could learn a few things from them. Microsoft hands out patent cubes; Apple hands out design cubes. I think that says something.