I didn't get that at all. In fact he seems to be suggesting what Apple's thinking may be in terms of the Apple Watch fitting into their strategy.

The entire Apple's New Market section is muddled. Apple will "leave smartphones behind" for "foundational services" which are accessed...through a smartphone.

Its because we're coming to the end of the smartphone boom. Processors are about as fast as they can go within the energy and heat envelope of current technology and displays high enough resolution that they are the start of the VR boom. But the easy gains are gone because no one has any idea how to make a smartphone which will run at full power for 24 hours.