I think he means it in inevitable that there will be something below (price-wise) Apple's offerings. If there is, Apple would prefer to see lots of suppliers. That will keep keep margins down for the low end stuff, so the suppliers will not make enough profits to dare invest in high end stuff (traditionally, that has done in workstation manufactures such as Sun and SGI). It also will force those suppliers to compete on price, so that they will not gain experience in building for high quality.

Of course, even if that happens, the risk remains that, eventually, the low end stuff becomes 'good enough'. Half the quality at a third of the price will at some stage look enticing to many.