Someone said :
They lost out due to very inefficent cpus and rubbish design. They were lucky to get Jony Ive. Even though I think Android is ultimately a weaker platform than the closed IOS, I can definitely see the point. It's like MP3 vs. FLAC (excuse the audio comparison). Android would be similar to MP3 with freedom and marketshare, but FLAC like IOS would be the more solid product in my view.
Freedom of development plays such a big role and it's times like this that I really am glad that we have people like Linus Torvalds in the world that give the technology to the community for development. I bet Gates / Jobs were kicking themselves when he did that.
I disagree, I think they lost out due primarily to their excessively tight controls, a control-freak tendency that they maintain to this day. I wonder though how much this was a product of Steve Jobs, a true paradigm example of the control freak if there ever was one.
Even taking your point though, that it was more about efficiency etc. its hard to imagine that in the long run one controlling, regulated company like Apple can withstand the greater diversity that exists in its competition.