Those of you old enough to remember Apple's 1st era of market dominance in the early 90's, before it fell off the cliff of near bankruptcy, only to be saved by Steve Jobs' return --- this will feel all too familiar: Apple pioneers a new market segment, dominates market, refuses to budge on price. A competitor comes out with an inferior but widely-licensed product (then, Microsoft/IBM), and gradually Apple loses market share to the point of obscurity.
All this stuff of Phil Schiller's -- "we're not going to reduce price to compromise quality" -- is the same tape recorder as Apple's approach in the late 80's, when Apple did not see it coming. Apple did not see it coming then, and Apple does not see it coming now.
The $120 billion cash pile perhaps makes Apple less vulnerable, but, as you can see from RIM Blackberry, a cash pile will prolong the torture as the victim dies a slow rather than quick death, but a cash pile cannot save you when the market says, "Hey, iPhones aren't cool anymore." That is the point of the death spiral, when a sufficient critical mass says, "Hey, Apple's not cool anymore".
And don't anyone say that's not possible.
