Consumers and workers prefer it when it matches what they want to a high enough degree. Too much variation means too many decisions that either do not matter or you have to be careful to get right. That's less of an issue when there's less choice.

The problem is that this requires the group controlling ecosystem to accurately follow the needs of the masses. If what they provide starts mismatching what people want, more and more people begin to be unhappy, and it's very easy for the goals of the public to misalign with the goals of the controlling group over time. Just because people seem to prefer it now doesn't mean they will a decade from now, but a decade of control can cause real problems when trying to make changes. It's very easy to get into a local maxima type situation, where it takes a lot of time and resources to just come to parity with an alternative, much less capitalize on where it can exceed the status quo.

Imagine a situation where Firefox didn't exist. Since all the other major browsers have moved to Webkit (or Webkit forked) engine, what would the cost be in time and effort of highly skilled people to make a browser engine from scratch? I'm not sure any project would succeed, or if it did, it might be a decade in the making.

People like ease of use, but people also really dislike being stuck without a choice. I think people realize this, which is why even though they often vote for convenience with their dollars, they also express a preference that alternatives exist, even if they don't use them, because they recognize both the benefit of having that option as well as the pressure it puts on their preferred choice.

I think if you ask, most iPhone users would say they prefer their current phone. I also think if you asked them if they think they would be better off without Android existing, they would say no, for exactly the reasons above; it makes Apple move forward with advancements, and it provides an alternative if they ever decide they really don't like something Apple is doing.