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Maybe the computer industry should learn something from the car industry about merging design with function. Those are large corporations that tend to do a much better job overall with producing a variety of designs (some functional, some beautiful) with a variety of functionality (some cheap, some durable). And yet most car companies don't have the dictatorial (or should I say Papal?) power that Jobs has.
Indeed, Apple seems to be an example of design at the extreme. What's interesting is that compared to a company like Lenovo/IBM, which is at the complete opposite end of the spectrum because they emphasize engineering, Apple is doing significantly better in the consumer market.
Still, both companies seem stuck in smaller niche markets. What they really need to do is combine the two as you suggest. Only then will they break out of the holes they've basically dug for themselves.