They had no differentiator, Apple products were seen as beautifully machined luxury trinkets. IBM, and then Intel had them by the balls because Apple couldn't improve the performance of their products unless Intel innovated on their chips - which they had no reason to.
This is a direct response to a perceived threat:
"We believe that we need to own and control the primary technologies behind the products that we make, and participate only in markets where we can make a significant contribution" - Tim Cook
https://explorersfoundation.org/glyphery/458.html
>Or 5-6 years earlier when they started developing iPhone?
https://www.history.com/news/iphone-original-size-invention-...
"Apple executives worried that the iPod would lose market share once cellphone manufacturers figured out how to put MP3 players on their phones. But not if Apple beat them to it."