This is not the early nineties and it's not the PC market. Steve Jobs' quotes may not apply to the current market and current products. The race to the bottom in the PC market was over a decade off. The race to the bottom in mobile is imminent and would probably be happening now if it were not for Apple.
I think Steve's thoughts there translate perfectly to the iPhone.
What he's saying is that as long as Apple was making a profit and was financially healthy, they could afford to sacrifice some short-term profits in order to spread their products.
He's saying that what went wrong at Apple was that they became greedy - they had an early advantage, and they stubbornly believed their product was so superior that they could demand much higher prices forever. Ultimately, the competition caught up with 'good enough' products for much lower prices, and it destroyed Apple's future in PCs.
There are two ideas of what Apple is:
1. A company which builds the best products it can, or
2. A company which makes as much money as it can.
If you believe that Apple's goal is to make the best products,
who cares if their profits fall? So long as they remain healthy, they can afford to lower their prices because it means more people have access to better products. That's the point Steve was getting at; it's not about making obscene profits; the vision was to "make the thing an appliance and get this out there to
as many people as possible"
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If anything, Steve's comments are
even more fitting of the smartphone market. The global technology industry is much more developed than it was in the 90s, and the so-called 'race to the bottom' has happened much faster than it did in the PC industry as a result.
Look at the iPhone's market share since launch to see just how fitting those comments are. The iPhone initially took the world by storm, and early Android devices (like the G1 and G2) couldn't hope to compete. Apple stuck to its guns, insisting that their product was superior and they could demand much higher prices for it, which left an enormous space for the competition to enter. Apple made ridiculous profits for a number of years, but now their profits and market-share (especially outside the USA) are falling.
They went for profits instead of market-share, and it could very well have cost them their future once again.