"The market can remain irrational longer than you can remain solvent." -- John Maynard Keynes.
Taking a short position in the competitors is troublesome because you need to time it right. If you think apple can win, you can go long any time the stock is low and end up a winner.
who was apple competitors in 2000s anyway? I don't recall anyone noticeable
What happens when the entire market segment balloons? APPL might beat out MSFT, but if everyone is more profitable, your short failed.
Are there publicly-available financial instruments that account for this?
A put order would work well for this, IIRC.
Side-note: Apple's ticker symbol is AAPL, not APPL. It got me the first times too.
Don't you have to borrow stock to sell it short? Can you do that for 6 years?
You have to know what their compeditors are. Pre iPhone, Apple's compeditors were Microsoft. The iPhone makes it look like Apple's compeditors now are Nokia/RIM (the makers of Blackberry). However a case could be made that Apple's current iPhone compeditor is or will be Google. So if you wanna bet on the iPhone, it's not clear who you should short.