I would think that a universal interface would in fact encourage innovation. Why would someone make some peripheral when they know it will only work with one MP3 player (1% of the market, unless that player happens to be an iPod)?
However, if the company knows that they can make something for a large number of MP3 players they will be more willing to make such a device.
Take for instance the USB cable. Look at all the wacky things that have popped up since that came out. I just saw a cup warmer at the store the other day. Why would you plug a cup warmer into your computer instead of a wall? Who cares! The point is you know that you can plug it into 99% of the computers out there.
News.com had story about Microsoft trying to get non-apple music player manufactuers to get together and have simimlar interface for accessories (like the Ipod dock). I like the basic idea, but it would do a lot to discourage innovation.
Link to the story.
http://news.com.com/Finding+harmony+among+iPod+rivals/2100-1013-5975839.html?part=dht&tag=ntop&tag=nl.e703

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