I don't think it's a protection thing, and loss-leader isn't entirely fair. The App Store makes money, there's no question about that. It's just that the profit

I don't think it's a protection thing, and loss-leader isn't entirely fair. The App Store makes money, there's no question about that. It's just that the profits from the hardware make the App Store money irrelevant. Apple almost certainly makes more money from the Google Searches in Safari (maybe even just in MobileSafari) then they do from the App Store, figures in the hundreds of millions. Compare that to the iPhone profits which are in the billions already.