ITunes is a distribution service. They make money off it. It's like saying "Valve is just doing games" where most of their money comes from selling the contents of others. When you have a monopoly on distribution on a specific platform, that's a service where people are locked into using. I don't know how to explain it in any other way to you.
No-one is arguing that they make money from it. Nor is anyone arguing that Apple doesn't do services. They are arguing that they make far more money on hardware sales than services, and thus are primarily a hardware company.
Except they're tied. The way you get Apple services is buying Apple hardware. You can't buy most Apple services separately from Apple hardware, and you don't get charged for many Apple services aside from the purchase price of the hardware.
The debate over whether Apple makes money off hardware or software is ridiculous. Every iPhone contains both Apple hardware and software, and works in concert with Apple services, designed to be a cohesive whole. It's ONE experience, designed top to bottom to work together. That's Apple's entire value proposition.
