In this instance, to my knowledge, Apple isn't using shell companies. It has iTunes set up in Luxembourg, but that's a very real company. And each country has it's own Apple subsidiary which again are real companies in their own right.

I'd say that it's hardly tax avoidance, since they pay their taxes in the countries where the revenue is generated. No one in their right mind would give up 35% of their wealth simply to move it to a different country, and nor should they.