Well, of course Steve Jobs was right in theory: there are mouse/keyboard UIs and touch UIs and you don't design them the same way, and using touch on a device in "laptop mode" is a recipe for "gorilla arms". I can't find a crack in that logic, but... that doesn't seem to be preventing Microsoft and others from selling a shedload of "convertibles" & calling out Apple for not having those features. Since that is, apparently, the only sector of the PC market currently showing much sign of life - so there's probably more money in it than a new Mac Pro - I guess that, at some stage, you have to give the customer what they want, rather than what they need.
However, first off, I guess the obvious candidate is going to be the 12" iPad Pro, so it will have a reasonable sized screen.
Secondly, Apple could potentially create a device that seamlessly mixed iOS and MacOS apps - so there were some apps you'd use with a keyboard and trackpad, others that you'd use in touch-only mode, and some that offered both interfaces. Not ideal, but Apple are better placed than Microsoft to make it work because they have decent software catalogs on both mobile & conventional, including lots of apps with versions on both platforms. Microsoft's problem was that they had nothing to offer on mobile.