Even the bump when the iPhone 4 was released didn't stop the ascent of Android. Android is now over half the market in the US, and about the same worldwide. Apple simply cannot compete against the slew of options from other manufacturers.
Want a physical keyboard? No Apple. Want a screen larger than 3.5"? No Apple. Want 4G? No Apple. Want an SD card? No Apple. Want widgets? No Apple. Want to play WMVs or WMA media? No Apple. Want 3D? No Apple. Want a smaller than 3.5" screen? No Apple. Want a world phone? No Apple.
And on and on... You can find all those options with other brands. For example, I want a world phone (Verizon in the US/CDMA here, GSM for overseas). There is ZERO Apple option for me. And I'm not willing to sacrifice because at my house in the US, Verizon is the ONLY carrier that has good coverage (literally - friends with Sprint and AT&T phones get zero coverage here, I get great Verizon coverage). And when I travel internationally, I like to pop in one of my SIM cards I have, so I can activate my "local" number that is cheaper.
There is NO Apple option for me - I cannot even consider it.
Apple's strength is its slavish devotion to getting a small set of features perfectly right on one single hardware platform. That necessarily restricts choice and options, and makes it hard to maintain any kind of significant marketshare.
The only reason Apple is seeing quarter-over-quarter growth of iPhone sales is because the market as a whole is growing faster than their slide of marketshare; once the US and EU markets start to saturate, and the growth moves to Asia (where Apple is simply too expensive for most of the market - SE Asia and India and most of China), you'll see Apple's sales start to slide down as well, with their marketshare.
The aberration is that a single phone with a fixed set of functionality managed to burst on the scene and grab so much marketshare; long-term, it'll slide to the 7-10% of overall marketshare where one would expect such a phone to really exist.
but they are estimating 50 Million iPhone 5's by the end of the year.
Yeah, I don't buy it. Less than 3 months of sales (announcement in October is the rumor), 50 million phones? That's 20+ million a month. That would triple the peak sales of phones that Apple ever had. Wishful thinking - I don't think they could even make that many.
Rumor mill - based on parts collected at various suppliers. iPhone 5 WILL be a World phone. It's being released for AT&T, T-Mobile, Sprint, Verizon as the iPhone 5; and a CHEAP ($99) Version is also being released (without contract) - which is rumored to be an 8 Gig iPhone 4.
IOS 5 will be released at the same time as launch, and will take everything to the cloud - backing up your last 1,000 pictures, your complete iTunes library - all free; plus another 5 Gig of non-iTunes apps or music for personal use - again, free of charge. This will make the 8 Gig iPhone 4 useful, as it can then stream music, video and download apps on an as-needed basis.
With the data backed up to the cloud - your need for the SD card goes away. But, if you GOT to have it, you can buy a $29 set of Apple Camera adapters that attach to both USB and SD Cards - and they will upload the pictures (only)to the Apple device - and from there to the cloud.
The iPhone5 will support the 4 inch Retina screen. They are doing this by extending the existing screen to the sides to he edge, and either removing the home button, or incorporating it into the screen.
The slide of marketshare of iOS devices you are mentioning - just isn't there. I suggest you re-examine your sources. Just a little digging into the iPhone 5, and iOS 5 - I think you'll understand why they are estimating 50 Million phones. And this is a typical Apple conservative guess. Apple doesn't over-build the number of devices they are hoping to sell - they will put up with a 2-4 wait time (as in the iPad 2) until manufacturing comes up to speed - but they do'nt overbuild. You'll get the final word on or about Sept 7th. I think you'll be pleased.
Oh, as for why not supporting WMV - not now, and likely not ever. Why not? Because .mp4 and H.264 are both rendered in hardware (not software) to save energy. To render in WMV means shuffling bits around - this gobbles power. The video portion of the A4/A5 chip is designed to do this rendering (and ONLY this rendering) - so all it can ever do is .mp4 and H.264 - but it does this burning a fraction of the power your Android phone would use doing the same thing. In mobile space - this is a critical thing.