To be more clear when I said "most of their money" I did not mean most of their total revenue for the company, I meant most of the money they make from you during their relationship with you as their customer.
If you think about it your relationship with Apple as their customer begins with the hardware purchase, but then as you use the hardware you keep feeding money to Apple every time you make an iTunes purchase, in app purchase, buy extra iCloud storage, etc.
The goal is that this residual source of income will surpass the initial income from the sale of the hardware. In that case they could give away the hardware at a very cheap, subsidized price, or even for free and then enjoy the steady stream of money from their other services that run on the device.
Apple make money by selling hardware. First they sell you iPod, which you like very much and start looking for their mac. Then the iPhone come out and you like them too. Next one is iPad, guess what, you already know how to use them. They drive apps price to 0.99 and make their OS free, what does that tell you about their way to make money? Apple at heart is a hardware company with very good software engineer.
If you think about it your relationship with Apple as their customer begins with the hardware purchase, but then as you use the hardware you keep feeding money to Apple every time you make an iTunes purchase, in app purchase, buy extra iCloud storage, etc.
The goal is that this residual source of income will surpass the initial income from the sale of the hardware. In that case they could give away the hardware at a very cheap, subsidized price, or even for free and then enjoy the steady stream of money from their other services that run on the device.