It isn't as small as you might imagine. However it is a better path to take than building a Hackintosh which was my point.
Frankly I ran Linux for years and for many things it is a very good OS. What has me on a MBP right now is iTunes and other media services. Well that and one gets tired of a new distro every 6 months.
It is true that Apple doesn't give anything away but at the same time the margins are not dramatically different form on model to the next. I would imagine those margins are greatest on the Mini based on estimates of raw parts costs. Of course no body knows what Apple really pays for those LCD screens and other parts in the iMacs that are generic. This Mini on the other hand is made up mostly of off the shelf Intel parts assembled in a minimalist design, then sold at a high price.
As to healthy profits that is not something that the Mini is immune to. Obviously on a dollar basis they are less than the other machines but percentage wise I suspect that they are the same or better than the iMacs. It is all about low end hardware sold at high prices
Anything that needs space for even one PCIe card and internal storage expansion locks the form factor into a box of some description, and I have not seen any indication that Apple has any interest in selling a consumer PC that is a box any bigger than a mini.
I hate to say this but you are thinking small here. Modern hardware offers up all sorts of potential possibilities. For example consider storage, if you stay with old tech, that is 3.5" drives you use a lot of space and a lot of power. The question you have o ask is that even wise for a fresh hardware design, I'd say it is not. Looking at storage again Apple could build such a platform with hybrid slots that take both laptop drives and any of a number of new card standards for solid state memory.
The Mini currently takes two drives with the qualification that they aren't easy to get to. A little thought would lead to a machine that could take four such drives or a combo of traditional drives and SSD cards. Add a fractional sized PCI -Express slots or one of the other standards and you end up with a lot of functionality in a box that isn't by any means huge.
Would such a machine be desirable? Of course! I might even be in the market for it. Would some version of Apple, in some alternate dimension where they didn't have the iPod, iPhone, and iPad, make such a computer? Quite possibly! But not this Apple in this dimension, and continuing to pine for such a machine is tilting at windmills.
You see things like IPod, IPad and iPhone are what make such a platform even more desirable. It is the box that becomes Apples digital hub that they speak of so much. One thing that hub needs is lots of storage. It is no mystery, to me at least, that Apple needs a platform that can more easily support all of those portable devices with their backups, apps, and media files.
The Mini comes close here but frankly isn't the most powerful platform going.
Yeah, you and your eight friends go buy Windows boxes. The number of people switching from Mac to Windows is such a small percentage that it's basically a rounding error. The people switching because they really want some sort of box for a computer instead of the elegance of the iMac is even smaller.
Getting stuck with Windows software is a reality these days as some stuff will never get ported to the Mac. The solution for that is a VM and a Windows install.
Last year I went to Maker Fair in Detroit which was held at the Ford museum. Of course Ford took advantage of this to show off all the new tech going into their vehicles. Some of those vehicles where so tight under the hood that you couldn't leave a pencil in there without causing problems. At the current time I was driving a ten year old truck and frankly was shocked.
I won't argue about ones ability to service such beasts but the days of doing a spark plug change in a half hour are gone. I'm not to sure you could do such in half a day because simply reaching the component would require a major disassembly effort.
So, in this case, the iMac is very similar to a modern car - think of the RAM as the oil filter or fuses. Everything else is out of sight and not considered 'user serviceable'. It would, admittedly, be nice if the hard drive was also easy to get at, but Apple hasn't found a way to do that and manufacture and arrange the case to allow it. It's not so different from a modern automobile at all. Instead of the big, loud tower cases that we can open and swap components in and out of to our hearts' content (I built most of my PCs between '96 and '05), we have an elegant, quiet iMac that we can't do much work on ourselves.
Times change, markets change, consumer tastes change. Apple has brought the market to them, and I don't see any indication that they're likely to go back in any way. Everything about the company's products, in fact, says that they will move toward more integration, not less.
The move to higher integration is being driven by the shrinking of electronic components. It is the only way to get to markedly improved hardware these days. However one thing that tech has had trouble keeping up with is storage demands. I don't see this going away because the trend is for data to expand much faster than storage.
Just look at the average computer user and video. Apple started out with Quicktime video that used up very little bandwidth and user storage space, that worked well with the computers of the time. As technology progressed and normal users began to adopt it we have continually ran out of storage space with users often resorting to less that desirable tertiary solutions. Demand goes beyond video but it is certainly something all users understand.