This is one part of Apple's model that I swear people just don't get at all. Apple, as a company, refuses to operate in unprofitable hardware markets. So, they

This is one part of Apple's model that I swear people just don't get at all. Apple, as a company, refuses to operate in unprofitable hardware markets. So, they make a $329 7" tablet instead of $199. They make a $400 tablet with "outdated" hardware, they make a $500 tablet that is top of the line. They won't sell a sub $999 laptop. Apple then focuses on selling as much of those products as they can irrespective of market share. They don't deep discount just to gain "mindshare" or "marketshare". Engadget and others could moan that it isn't fair, but to be fair the only company that has been able to build and sell even remotely comparable hardware at comparable margins is Samsung, and frankly that is largely because Samsung supplies the same parts to Apple, so Apple is effectively subsidizing Samsung's overhead. Other companies could play Apple's game, there certainly is room to do so, but it is a low volume/high margin strategy traditionally. The anomaly is Apple's been able to take low volume/high margin to very high volumes while leaving the high volume/low margin business to everyone else as prices fall downward. I don't feel bad for Acer, LG, ASUS, Sony, Dell, or HP because they've all become so bad at designing, building, and selling a premium product that they really don't deserve to be competing. Ironically, much of iPhone's design was inspired by Sony's design heritage, and yet, Sony is still yet to truly match it. To put it another way, you know it's kind of a sad state of affairs when Microsoft can put their own team together and ship a legitimate competitor to the iPad in a very short period of time and Microsoft isn't even a hardware company.