He's talking about the supply chain optimization. One example is the dram chips used to build the iphone came from Samsung. They were sourced at quantities so large they are actually cheaper for Apple's iPhone than they are for Samsung's own phones. Streamlined products where the only segmentation is storage space make this possible. They can actually request such a large order their competitors can't match and get squeezed to the end of the manufacturing line while also paying more. To match they have to spend more. This hurts even more if your'e not controlling the distribution.
To the average non-techie all they have to decide is what color and storage size they want. This makes the device friendlier to consumers and takes away stress of understanding the hardware choices. The customer is actually happier if they don't have too many choices. People pay as much for this as they do the curated apps.
I've read elsewhere that Apple also started fronting the capital for the plant investment required to build the components they need, in return for very favourable lock-in agreements ("We will always be able to buy your product at 10% less than anyone else." That kind of thing.)
In short, Apple is thinking big & thinking long term all the time & they are reaping the benefits. Even if you don't like the products (and I personally find the whole walled garden thing somewhat creepy) you have to recognise that their strategic thinking is what's lead them to this dominant position in terms of profits.
(There's also the taking advantage of something approximating slave labour in China thing of course, but sadly that's hardly limited to Apple: like everything else they just seem to be better at it than anyone else is.)
To the average non-techie all they have to decide is what color and storage size they want. This makes the device friendlier to consumers and takes away stress of understanding the hardware choices. The customer is actually happier if they don't have too many choices. People pay as much for this as they do the curated apps.