> When the first iPod shipped with 5gb of storage, it was retail $399. Toshiba PCMCIA 5gb drives were also retail $399.

True, but that price is retail, and it was a PCMCIA card and not a bare drive. It would be interesting to see what they charge for those bare drives, it being undoubtedly the lion's share of the total cost of the unit, but I looked all over the Internet and couldn't find, and I doubt Toshiba would tell me if I called them up and asked.