The iPhone has peaked

Maestri said iPhone sales are “not necessarily representative of the underlying strength of our business.” He later added that “a unit sale is less relevant for us today than it was in the past, given our breadth of our portfolio and the wider sales price dispersion within any given product line.”

Translation: Apple’s iPhone lineup covers a wide range of pricing options, from $449 for the lowest-priced version of 2016’s iPhone 7 all the way up to $1,449 for the highest-priced iPhone XS Max. That broad price range means individual unit sales no longer give a full picture of the strength of the iPhone business. The fact that Apple reported flat iPhone sales along with a significant jump in profitability is proof of that.

This doesn’t mean everything is rosy for Apple. The company also reported light guidance of $89 billion to $93 billion for the holiday quarter, slightly below Wall Street expectations of $93.02 billion. CEO Tim Cook told CNBC’s Josh Lipton on Thursday that the timing of new product launches and foreign exchange rates all factored into guidance.

Beyond hardware, Apple will start telling a deeper story around its services business, which generated $9.98 billion during the quarter, up 27 percent from a year ago.

Services includes items like Apple Music subscriptions, App Store sales and iCloud storage subscriptions. It also includes the fees that Google pays Apple to remain the default search engine on the iPhone, which analysts at Bernstein estimate is around $3 billion per year. Apple said it will start reporting margins for its services business, providing more detail on how well it’s performing.

“With increasing disclosure coming for services (gross margin), we believe Apple is simply trying to change the focus towards the overall installed base and services revenue per user,” Piper Jaffray said in a research note Friday.

Cook said on Thursday’s earnings call that Apple’s installed base is seeing double-digit growth across all devices. That suggests that a meaningful number of first-time iPhone users, including switchers from Android, are buying used devices. Those users don’t show up in new iPhone unit sales, but each new user is an opportunity to capture new services revenue. In other words, services grows with the installed base, not just with sales of brand-new phones.

That’s going to be the big story out of New Apple going into next year. The New Apple is no longer just about growing the iPhone user base, but proving that the company can generate more revenue out of each iPhone, iPad and Mac user through subscriptions, digital services and higher prices on hardware.

— CNBC’s Josh Lipton contributed to this report.

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