Microsoft blazed a trail of both incredible profit margins and dominant market shares. I have absolutely no doubt that Apple was dreaming of the same scenario.
I do think there is a bit of lost perspective in all of this. Just a mere six months ago when people discussed Android desperately clawing for a slice of marketshare, universally there were comments that everyone everybody knows owns an iPhone, and no one owns an Android device. Effectively there was a short period where the iPhone absolutely owned the smartphone arena (I simply ignore RIM phones as generally they're work provided, or they're purely used as messaging phones, neither of which really qualifies). Major organizations were turning significant focus on iPhone applications: If you didn't have an iPhone, you were simply a second class citizen. Case in point -- CIBC here in Canada that spend millions of dollars advertising their iPhone application, while their terrible mobile web site withered.
On the lock-in I'm with you, but I do think the whole iTunes store/Fairplay was a happy accident that the music companies forced Apple to do. The music companies inadvertently helped Apple lock consumers into the iP*d platform, Apple leveraged it for the app store that pundits/developers were demanding (remember when iPhone first came out and the outrage about having to use web apps?)