Im sorry that you have taken license to describe what exactly the intent of my verbiage was. Myself and many many other business men would highly disagree with your statement. Apple's immense success and profits are based exactly on the model you are refuting. Also your statements of exponential growth in the low end of the market contradict experts reports and data from the industry (including the report in this article).
What alternative universe is the article you are quoted from. The article this thread is based on here are a couple of quotes
From about November 2008 to April 2009, Mac year-over-year US retail sales declined, even as Windows PCs dramatically gained. There was kind of a numbers reversal, following the late-September stock market crash.
For example, in October 2008, following release of new aluminum, unibody laptops, US retail Mac revenue grew 25.5 percent, while Windows PC sales fell 4.2 percent, according to NPD. By January 2009, Mac retail revenue was down 10.4 percent from a year earlier and Windows PC revenue was flat.
The unit changes were dramatic, too: in January, Windows PCs were up 16.7 percent, and Macs were down by 5.4 percent. In February: Windows PC units sales rose 22 percent year over year and Macs fell 16.7 percent.
So where is this article denial that there were upticks in the Windows PC market volume at the lower end? Exponential ... who threw that out there? That is an inaccurate adjective that has crept in through this forum. However, the trend is up; so contradicted isn't entirely accurate either.
In that Fall-Winter period Acer moved up in market spots on Gartner and IDC. Primarily riding on increases in netsbook market segment.
Every vendor without one was sliding backward.
Apple did once try to compete in the model and sector of the market you speak of and almost went out of business. Their resurrection and unprecedented success since has been because of the model you so freely disdain!
The notion that Macs needed a volume over a "survivable large player" percentage to be profitable was and still is correct. How they went about implementing that mid 90's (or so ) was flawed.
Apple was much more lacking in focus of effort than in what needed to get done. Similarly the R&D costs were dramatically higher and having much smaller top line impact. ( tried several efforts to switch internally to a new OS platform and blew off project to put Mac OS on the standard PC platform; Star Trek ).
Since then ....
Apple has nuked most Research. Apple has followed along after the market and done evolutionary refinements not revolutionary stuff. ( like Newton which Palm did leverage better. Mainstream GUI which Microsoft leveraged better. ). Since moving to being a better second/third market mover then have done better.
When MP3 vendors were slow to take them seriously Apple did do the inexpensive, high volume market with the iPod. They have made lots of money at it. So puzzling why sub 12% market share is suppose to be some kind of Apple standard operating procedure for success.
Gone to rigid product buckets and ignored a subset of consumer needs.
Similarly when Tim Cook came in he slashed several hundred millions in inventory costs in several months. Hard to tell how much was just sloppy stuff by his predecessor as much as him being a superman. He is very good but look even better after following folks who are bad.
Apple is also just selling 99% of the same hardware components at the electric level as everyone else is. So they get the same margins as the other players but don't pay any significant Microsoft OS overhead in units shipped.
Finally the Mac share tanked while Apple soaked it to launch iPods. No real adverstising for a year or so. Jobs milked the Mac like as cash cow exactly as he said he would a long time ago. Revisionists seem to want to gloss over it now but Mac share when dramatically down before it got better. Those low water marks were not sustainable.
Fortunately for the Mac, Apple has found a way to keep the Mac platform moving forward as not purely a cash cow .... for now. Being coupled at the core OS level helps alot.