It's making him a niche player.
This fact is becoming increasingly clear as Android phones begin to outsell iPhones. Just as with the Mac and PCs, Jobs' insistence on control over his ecosystem is becoming his undoing.
Today's phone OEMs are much like the computer OEMs of 25 years ago. Historians (and those of us with graying hair) will recall that the Mac had nearly a five-year lead on Windows', in terms of a practical Graphical User Interface (GUI).
Yet somehow the market suffered DOS all that time, and once Microsoft delivered Windows 3.0, breaking the now-quaint "640K barrier," the market followed.
In the case of Android, the wait has not been nearly that long. But the Android does apps, and video, and most of the other things the iPhone can do. So the OEMs of our time, HTC and Motorola and the rest, grabbed what they could control and have started making money from it.
Apple defined the modern smartphone market, but it could not dominate because in time a "good enough" solution appeared that the OEMs could build and sell in their own way.
All this holds some interesting lessons for the next phase of our struggle, between the insanely-great iPad and whatever Google delivers as a Chromium OS.
Insanely-great will always lose, in the end, to good enough, unless insanely-great is willing to compromise. Compromise is really what open source is all about, as I explained earlier today.
It's the willingness of open source to adapt that gives it strength. Just as is true with America itself. Steve Jobs is a great American, but America is bigger than Steve Jobs.