The introduction of the 4-inch iPhone SE earlier this year appeared to hurt revenue and profits as some customers bought that device instead of Apple’s bigger, more expensive models.
“Apple is moving from only iPhones matter to iPhones and services matter,” said Ben Schachter, an analyst with Macquarie Securities, who estimated that nearly one-third of the company’s quarterly profits came from services like App Store purchases, Apple Music subscriptions and the iCloud storage business. Revenue in the segment rose 19 percent to $6 billion.
Source: Apple’s iPhone Sales Drop Again, but Services Are a Bright Spot – The New York Times