In the 80's and 90's Microsoft changed the monetization model of the personal computing industry from a hardware-centric model to an industry that monetized software (Windows, Office, etc.) at the expense of the commoditization of PC hardware. It's why PC prices will continue to fall and Windows OEMs have a hard time differentiating their products in the marketplace to create hardware margin opportunities. They all run Windows and consumers have been trained to focus on price. Microsoft has sucked the bulk of the margin out of the PC market through Windows licensing fees leaving little in the way of resources for OEMs to invest in hardware R&D to differentiate products from those offered by competitors.
Apple has reversed the Microsoft monetization model with a focus on the hardware devices. Apple maintains high margins and is aggressively commoditizing software - iLife is free on new Macs, the pending Snow Leopard upgrade will cost $29, iPhone apps by the thousands are free or as low as $.99 at the Apple app store. The change began with the release of the original iMac and continues today in products such as the iPhone and iPod touch
Apple's focus on hardware design and the company's passion for creating pleasant-to-use products has moved the monetization model to the value of hardware versus software. This is why and why Apple has the highest hardware margins in the PC industry today and dominates the markets for PCs costing $1,000 or more.
It's also why Apple's market cap is closing in on the market cap of Microsoft as the Cupertino-based company eclipses the maker of Windows as the driving economic force in the PC market and emerges as the the most potent force in the handheld communications and computing device on the planet.