This is exactly right, and I'm sure it was a shot at the original Microsoft Tablet PC which required a stylus for input. The Pencil they announced today is very clearly for drawing applications and not intended to be the primary means of interacting with the iPad.

In context Jobs was talking about getting them, putting them away and losing them.

"How are we going to communicate with this? We don't want to carry around a mouse, so what are we going to do?

Oh, a stylus, right? We're going to use a stylus? No.

Who wants a stylus? You have to get them, put them away, you lose them, yuck. So let's not use a stylus.

We're going to use the best pointing device in the world; a pointing device that we're all born with - we're born with ten of them. We're going to use our fingers. We're going to touch it with our fingers. And we have invented a new technology called multi-touch..."

I didn't know apple invented multi-touch.

By the way, I'm not saying they did, I'm just including the entire quote from Jobs.

The important part of the quote in this context is that Jobs was obviously referring to the stylus being the primary input device for the iPhone being unacceptable.

They didn't, but then again they also now have a stylus, so at least they are consistent.

apple did not invent multi touch.

Of course they didn't. That never prevented Steve from claiming they did...

You are taking Apple apologetics to a whole new level.

Not sure you are completely correct there, as he said it repeatedly in many contexts.

"It's like we said on the iPad, if you see a stylus, they blew it." - Steve Jobs

edited to add -

"as soon as you have a stylus, you're dead." - Steve Jobs

That is a direct quote from Jobs. "If you see a stylus, they blew it." You can say that Jobs' aversion to styluses was a little stronger than it should have been due to the devices he'd seen with styluses, but his stated opinion was not this moderate "Styluses shouldn't be mandatory" stance people are trying to ascribe to him here.

Context matters, especially in technology, where the entire industry is in constant upheaval.

Really?

It's pretty clear he meant "when you see a device can only operate with a stylus, it's a bad product."

But it doesn't have a stylus. You can get one if you want (for the low, low price of $99) but you don't need it.