Completely untrue. If you can refocus the effort you were spending to make that 1% profit onto something that generates more sales, then there's every reason to stop selling it. That's why product lines get condensed, not just in computers but everywhere. Less options means streamlined production, less material cost (because you don't need as many different parts). As long as you can move sales from the discontinued product to one of your other products, it makes perfect sense.
Not exactly true. This statement might be true in a constrained environment where there is a limit on either engineering design capacity or manufacturing capability. In the event that apple is not constrained, then the result is to loose those sales to customers that insist on a 17 inch laptop.
My personal opinion is that the low cost of engineering a new generation of 17 inch laptop would make money even if this is a two percent market. But then I don't know how hard it would be to select new processors, slap in a big ssd along with a hd, switch out the ports, and tell China to get busy manufacturing. Oh, wait ... I guess I do know how hard it is. (I know I ignored the whole motherboard thingy to work with new gen processor and memory and usbThree)
But I won't be surprised to see a 17 inch again some day.