The GIMP, Apache, PHP, and gcc developers are sure going to be sorry to hear that their software doesn't qualify as truly innovative.
Read the statement again. You left out "generate enough money to...."
He's talking prospectively; he's speaking about what is (or is not) going to happen.
He's saying there isn't enough money for an enterprise to produce an innovative product profitably in the open source model. That seems obvious to me.
But I'd like to understand how he's wrong.