First because what they make from the App Store is spare change for them.
Second because they did have the best browser for a while, and did very much to advance the state of the art (from WebSQL, to Canvas, CSS 3D and other stuff, all originating there, along with the original fast-JITed JS engine who started the JS-race to what we have know). And they did that for years after they had an App platform available too.
All without manufacturing logistics and hardware production costs. Obviously the computing infrastructure, payment processing and software engineering of the app store has a cost, but I'd imagine much less than those involved with building, distributing and selling a computer or mobile device.
It may not generate as much as hardware sales do, but billions of dollars hardly seems like spare change.
[1] http://www.apple.com/pr/library/2015/01/08App-Store-Rings-in...
That makes it around $3 billion, before taxes and infrastructure expenses, payment deals, etc.
$3 billion is spare change for Apple. They have 200 times than in cash.
As others have mentioned, there are other benefits from native applications, like vendor lock-in, which Apple isn't going to get with web-based applications.
[1] http://money.cnn.com/2015/01/28/investing/apple-cash-178-bil...
[2] http://www.apple.com/pr/library/2014/10/20Apple-Reports-Four...
Still, same order of magnitude, and still many times over their app profit.
>Also, I think its telling that Apple themselves mentioned App Store Sales as a main factor in their revenue earnings for Q4 of their 2014 fiscal year.
Telling towards what?
Its telling that App Store sales are a significant source of revenue for Apple. One that could possibly justify not making improvements to Safari that could make it better compete with native applications.
People don't feel locked with their app purchases. Case in point, the large volumes of people going from Android to iOS and vice versa.