Apple do understand software. You cannot release Mac OS X, iLife and other jewels without understanding software. Also Mac developers jumping off the iPhone bandwagon are not jumping off the Mac plateform.
For the iPhone, Apple tried a different model that nobody really tried before.
They indeed have a broken store but the previous models on other platforms never worked. The most successful one before was for the PalmOS and it wasn't over the air.
However Apple always been an arrogant company. With their customers, their providers and their developers.
The climax of this arrogance has been reached with the iPhone eco system (certainly helped by the arrogance of the mobile phone operators).
And for many it is not sustainable.
But anyways, who really cares?
Apple can open the doors of the store overnight. It wouldn’t have been the first time they do one thing making you beleive it was the only way and then suddenly change in the opposite direction.
That’s the strength of Apple: they can change. Not only they can change but they usually know when, with what, for who and at which price.
I never realised the arrogance was a trade mark of this process though. Note: I don't mean being evil by being arrogant.