That's a strong statement that I can't agree with completely. We can probably agree that most users don't care about most features other than dialing. When I asked why scrolling through a contact list on a Motorola RAZR is so slow the response I got is that most users don't use the contact list.
If most people don't use most of the features of their phones that's fine. But I do, and giving me a prettier package isn't going to change the fact that it doesn't have the features I'm already using. Apple is clearly more interested in less demanding users and have made a boatload of money that way. That's fine too.
But if you want to talk smartphones for power users, I think the iPhone has been missing some important features. In other areas, they've clearly surpassed the competition. This is a good thing for everyone. Even though I don't use an iPhone I've got a much better browser on my phone because of it.
Personally, there's no way I'm buying a smartphone that doesn't do MMS or copy/paste when there are others that do this in addition to just about everything else the iPhone can do. But I put a premium on features instead of user interface and it's not as if the worthwhile competitors' user interfaces are from the stone age.
The competition hasn't exactly been left destitute since the release of the iPhone either. If anything, their product line ups have only gotten stronger even if market share has decreased. Sure, Nokia is in the toilet, but I think it probably has more to do with the fact that they've more or less been sitting on their asses for a few years than the iPhone. I won't even bring up Windows Mobile because it's just sad. Blackberry, excluding the Storm, is looking better and better. Despite the fact that the design and build quality of the T-Mobile G1 is a cruel joke, Android is something worth getting excited about. If someone puts it on nice hardware we could end up with a very cool phone.