From the beginning, as Jobs reminds us in a flashback during D5, Steve has cooperated with Microsoft in every way he can. And it's wise to do so. Apple needs Microsoft. Because Microsoft owns too many standards.
But during the exact same interview, Jobs characterizes Apple as a
software company. He says that Apple's main focus is it's operating system. But wait - Microsoft's main focus is
its operating system... and Jobs insists that if you are a passionate software company, you're going to want to make your own hardware, too (but wait - Microsoft
doesn't make their own hardware...). And not only does Apple focus on their software - they elsewhere claim that it's more advanced than Microsoft's:

But notice how, with one hand, Apple's product (which directly competes with Microsoft's) is praised as being superior, Apple stresses compatibility and cooperation with the other hand.
All the while at D5 Jobs talks about how
PC Guy is lovable and the ads foster a cooperative attitude and he and Gates have always been buddies and Microsoft revolutionized computing etc. ad infinitum (but if Apple is more advanced than Microsoft, what does that say about Apple?). Steve Jobs, you are a subtle and cunning spin-master and I love you. Not like I love my wife though. Take a look at another example of Apple's near duplicity:

"iWork is the BEST way to create DOCUMENTS, PRESENTATIONS, and SPREADSHEETS. And one of the biggest virtues of this suite is that it works with OFFICE. Because Office is the standard, duh - everybody knows that." Or how about:

"Remember me? I
invented the friggen iPod, right? Well I built this new thing called 'MobileMe.' It's like Microsoft's Exchange, only way better on so many levels. I'm branding it as 'Exchange
for the rest of us,' because Exchange is the standard for businesses. But it is interestingly available at the same time that this new toy (you may have heard of it, the 'iPhone') begins supporting Exchange. So you can choose which service you want to use (hint: mine is better)."
Apple makes it as easy as possible to switch. You can still use whatever services and formats you're used to. But when everybody else starts switching, there won't be any reason not to use Apple's superior versions of all these things. Apple just keeps insisting that they are not direct competitors with Microsoft, they keep improving compatibility, and they keep coming out with products that one-up them (also - Office can't read iWork files [like Macs can run Windows but not vice versa] - all roads lead to Apple, and they are ONE-WAY, baby yeah!).
Brilliant.
Slick.
Shiny.
Glossy.
Chromy.