The increasing per device profit comes from growing consumption of goods on the platform. Songs, movies, apps, books. The % growth of digital content on smartphones and tablets is dwarfing even the meteoric rise of those devices themselves.
It is not on decreased COGS from outsourcing to China, since every computer and consumer electronics manufacturer in the world have been doing this and there are no signs of recent competition-driven price collapse in outsourced manufacturing. This doesn’t justify what happens in China, but that is a problem that permeates the industry as a whole and not any one company in particular.
That said, what Mr. Jobs was able to accomplish was to align various disparate industries to create a marketplace for digital goods in a way nobody was able to do before. Moreover, his company made it so convenient that people were willing to pay for the convenience. One of the few things that is better than free after all, is convenient. In doing this, Apple made it so that thousands of developers, writers, musicians could have a place to sell their things, thus ushering in digital goods in a way that allows the necessary creative destruction to happen to intermediaries, but at the same time give the content owners a new avenue to earn a living.
That his last keynote was for iCloud is a nice last salvo. Many were living this having your stuff just show up on multi-devices, remote storage and dispatch paradigm back in the 80s and 90s at research laboratories, universities and at Job’s NeXT. He talked often of it in keynotes. But this was on $7000 USD (in 1990’s money) machines. This could not be made accessible and useful to the masses until a number of technologies made it possible. Moore’s Law and the Law of Storage made processing and local storage big and cheap enough. Battery technology jumped to an acceptable enough state to allow real mobility. Cellular data networks came of age. And yes, globalization, automation and improved quality control processes made labor and manufacturing arbitrage accessible (via outsourcing) so these things could be built at prices that were affordable to many. In a way, this was a dream that he and others were trying to get to the masses for a quarter century, and the iCloud is his realization of that.
The true genius of Steve Jobs I feel was in sensing when technology would be really ready many years before it was, being able to steer a company to make big bets to chase those things, aligning all the other players to make the offering more valuable, driving the creation process at a very high bar until it was perfect in his eyes, then sharing his vision to everyone in a simple way, with relatable story telling that made it easy for people to understand and share in that vision.
At the very least, his ability to make these visions a reality for the masses is an inspiration to many an aspiring technologist and that’s what we are celebrating.