The whole quote is:
"With the market for third party d20 material continuing its death spiral, there is no longer a quick and easy way for new companies to establish themselves."
Using the words "death spiral" isn't a ringing endorsement of the health of the d20 market at the time. It was also about then that Green Ronin, one of the biggest d20 producers, announced going systemless with Freeport.
Also note the date of that post- January 2007- just months before 4Ed was announced.
The operative word being "before". I was asked to provide a link to back up my claim of seeing third parties saying d20 was not doing well before the announcement of 4th. I did.
EDIT: I'll add this as well:
http://necromancergames.yuku.com/sreply/12110/t/Can-d20-even-succeed-today-.html
At the time, WotC wasn't releasing much quality new material, just compilations and corrections of previously released material. In some cases, the 3PPs were busy supporting their own 3Ed variants more than supplementing WotC's product with generic releases.
3rd parties were also moving away from d20 at that time. Mongoose released RQ, Green Ronin went systemless, Malhavoc stopped producing, Sword and Sorcery as well, print runs had dropped from tens of thousands to maybe thousands if you were lucky, Kenzer all but stopped releasing d20 compatible material, Atlas had all but stopped doing d20, and smaller 3rd party publishers were dropping like flies.
And all this was happening because d20 sales were fine and healthy? No, that was happening because d20 sales were stalling. At least that was the impression I got back then.
Mongoose and Paizo has said that they were doing well at the time. A lot of others have said that they weren't. At least that's my impression of the discussions at the time. It would be great if some of the publishers chime in.
After all, this is just my impression of the state of the business at the time.
/M