I don't think it was Firewire that kept it as a niche product. It was that iTunes wasn't initially available on Windows machines, and Macs were still quite rare.
I had a G3 iMac (Graphite) at the time the iPod came out. So I got one. Actually, I got three: the first died after a day, the second was DOA, but the third kept chugging away for about 3 years until the battery died and it was only usable when plugged in.
It's funny to remember how unusual the iPod was. People on the tube in London, which isn't known for conversation amongst strangers, would ask me what it was. Tiny, about the size of a cassette case, with that that amazing white face and silver case. It was like something from the future.
