Although many like to focus on Apple’s product design excellence, another weapon in their arsenal is complete control over their supply chain. This allows them to sell devices like the iPad at very competitive prices while still earning significant margins. From Businessweek:

According to more than a dozen interviews with former employees, executives at suppliers, and management experts familiar with the company’s operations, Apple has built a closed ecosystem where it exerts control over nearly every piece of the supply chain, from design to retail store. Because of its volume—and its occasional ruthlessness—Apple gets big discounts on parts, manufacturing capacity, and air freight. “Operations expertise is as big an asset for Apple as product innovation or marketing,” says Mike Fawkes, the former supply-chain chief at Hewlett-Packard (HPQ) and now a venture capitalist with VantagePoint Capital Partners. “They’ve taken operational excellence to a level never seen before.”

By investing up-front—purchasing future components and services—Apple is able to not only ensure they will not run out of stock, but stifle competitors who now cannot secure required materials and services.