Pretty steep drop of 4%. I wonder will that be up or down this time next year.

I've been part of the Xiaomi movement since last year. So far so good.

The only person I've ever seen with a Windows Phone is my friend who's a giant MS fanboy and even he doesn't have one anymore.

The 100+ other people I know with smart phones either have an iPhone or Android.

I own a zune. I can already do that!

I wonder how low will it go before it stabilises.  

2.8% is nothing. I mean, 2 years ago many research firms predicted Windows would have 15% of the market by 2015 and that clearly hasn't happened.

Is this really true for the smartphone market? Apple makes over $100 billion revenue on iPhone hardware each year with a great profit margin.

Software revenue is only a fraction (10 - 15 billion) of the hardware revenue and the profit margin is also lower.

Googles AppStore revenue & profits also are only a fraction of their ad revenue & profits. 

Should feature phones not be increasing in popularity in the developing world?  Places like china and Indi? 

You kind of prove my point.  Apple is the exception, to the rule.  Like I mentioned in the OP, Apple made 90% of all smartphone profits in the 4th quarter.  So, using someone that is selling 20% of the products and yet getting 90% of the profits is not proof.  Long term, all electronic devices margins shrink to almost nothing.  Look at the huge number of vendors selling Android phones.  Yet, they don't make a ton of $$$.  Every year that Apple sells a ton of phones, but they also sell a ton of tablets using the exact same OS.  People are buying content in the $100-$1000's of dollars in their ecosystem each year.  So, if they decide to change out of that ecosystem, they no only have to buy a new smartphone, they need to buy all of their content again.  That's why Apple is in the position it is in, and will continue to be in it for the long haul.  THey already have their hooks in 300 million+ people that buy an new phone every 24 months or less and have to buy Apples phone to keep what they have.  If Apple allowed 3rd party people to build ios phones, their marketshare(in hardware sales) would be cut in half within 12 months, as a lot of the buyers would rather pay less for a phone.  But, Apple would still make out good from the apps and content, just not as good.

Another added thought, Apple isn't much into putting ANY cost into the software they sell.  So, the real margin on their software is close to 100%.  They are just a pass through of other peoples stuff with very little cost to them.