Jobs said a key reason is that Adobe's Flash Player is optimally built for laptops. Because laptops are larger than the iPhone, the performance of Flash on the iPhone would be too slow.
"There's this missing product in the middle," Jobs said.
When I hear someone such as Steve Jobs utter the word "missing," I don't take the usage of the word casually.
Even though- as you see at the top of this post- iPhone is YouTube compliant, that's just a start. I think this means a special video player platform for the iPhone is on the way.