This question was brought to my attention first as a graduate student studying product design.
Yes, I was shocked by the suggestion, but grew to understand how dominate the digital components of many products had become in creating the value of a consumer device. At the same time manufacturing capabilities worked to cheapen the value of form as a design element that created value through appearance.
"Say it Ain't So: Some say designers working today on consumer devices are merely making a container for software. We're not using physical products anymore, we're using software products. Software has made hardware irrelevant."
-Brad Weed, director of user experience for Windows
In the interview posted earlier, Steve Jobs states clearly and more than once that he holds this belief. He describe Apples as a software company. So what is a product guy/gal to do?