What the user probably means is that just because he said this publicly doesn't mean he meant it. Steve Jobs was great at marketing and was well informed on what potential buyers wanted to hear.
I believe this is specifically not to fear making something better due to potential cannibalization.
I suspect they don't feel iPhone apps (at as they are coded by developers today) as a "KVM-style" desktop experience is 'making something better' than the Mac - or even really worth doing.
SJ said a lot of things. There is nothing courageous about cannibalizing an iPod that had an average selling price of $200 and a much smaller market with a phone that is three times more expensive
Cannibalising a public company's most successful product and profit source is extremely risky, especially for management. There is a reason this is so rare. It goes against many of our ingrained behaviours as humans.
It was very obvious even then. Apple was selling 50 million iPods per year at $200 a piece. During the iPhone introduction, SJ said he was aiming to sell 10 million phones to capture 1% of the market the first year.
That means even then, the phone market was 1 billion devices a year. That was a much larger market than the stand alone music player market.
It was also clear that’s where the market was headed. Phone makers were already starting to sell music capable phones
The context I was thinking of was the iPad. At the time it was really thought it was completely going to kneecap the portable Mac line (even Apple believed it and invested more in iPad development than Mac development). It was only after Jobs left our mortal coil that the iPad really stagnated in comparison to what the hardware itself was capable of.