[shahan]

I don't think people do treat market share as a proxy for profit share. You don't really need a proxy for profit share because it's easy to measure. And if market share is publicly avilable information, so is probably profit share. It does make some sense to treat market share as a proxy for market power, though -- business people do this all the time.

An alternative interpretation of the article is simply that Apple is targeting a more profitable segment of the market -- smartphones.

It happens to be the case that this segment has grown really fast and have both the highest margins and the highest total profits. This is perhaps not the case in most industries, which may be interesting.

[dasil003]

The remarkable thing about Apple of late is not that they target a profitable niche (which is a given with their product pricing), but how much they grow their niches. They did it the iPod, iPhone and iPad.

If Apple stopped selling these things tomorrow would other vendors capture the surplus? Or would people just go back to spending more money on other things?

Whether Apple exists or not, it doesn't seem like other vendors can raise their margins because they are in such a foot race. Apple has somehow risen above the fray through a combination of doing integrated hardware and software better than anybody and mastering the supply chain. Where HTC and Samsung are trying to one-up each other on screen size, Apple holds onto their margins selling a smaller screen for a higher price. This seems crazy until you actually use the latest Android phone and you're like "Why the F can't they get the screen to work half as good as an iPhone".