You're not the only person who's thought of this. When the empeg got discontinued, many people, including myself and my friend, considered the idea.

You really have to ask yourself: If empeg, Ltd. and SonicBlue couldn't turn the thing for a profit, what makes you think you can make a profit doing the same thing?

Now, if you wanted to do a startup where you could make an MP3 player that was cheaper to manufacture and less expensive to sell to the general public, go for it.

See, that was the problem with the empeg: It was so expensive that it was hard for people to see past the price and discover that it was worth every penny even at twice that price.

My point is that if your goal is to make something exactly like the empeg, your product might suffer the same fate. If you want to make a profit, you have to design a different product.