But the third part of the argument, that the iPhone is the cash cow that will help sustain the company and help it grow the Mac and iPad lines, is a harder one to prove.
Apple does not break down how much it makes per device and it did not disclose gross margins for the iPhone.
For many, the iPhone is all about the upgrade cycle. If the current price and lack of expandability is too much to stomach,
Apple will need to do something to make the iPhone more attractive to current iPhone owners.
However, there are signs Apple is already following the standard upgrade cycle by offering an option for a new two-year service plan.
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One thing that should be clear by now is Apple knows it needs to make the iPhone more attractive to boost sales.
The most recent change to the iPhone's design, moving the fingerprint sensor to the back of the phone, is not really going to make it more appealing to anyone but the most hardcore of Apple customers.
But how does Apple go about making the iPhone more attractive?
Part of the answer may be to release an updated model with a premium look. If this iPhone looks like the Samsung Galaxy S8 or LG G6, but has the latest internals and maybe a long overdue price cut, then that should certainly appeal to a different group of buyers than the current iPhone user.
But Apple might also be planning something bigger and better in the future. At the moment the iPhone is very much the "kitchen table" phone, something most people own but don't really think about much.
But if Apple does something big to make the iPhone more premium, like release an iPhone that actually feels premium, then it could start selling the new model to people who never thought about buying one.
The change would need to be substantial to tempt people away from their current phone, but Apple has been trying to position the iPhone as the most premium smartphone ever since the original launch.
According to noted analyst Ming-Chi Kuo of KGI Securities, such a move could involve moving the camera and fingerprint sensors to the back of the phone. The camera, positioned vertically on the rear, is arguably one of the worst aspects of the iPhone.
Whether it is the dual lens technology, inconsistent white balance, as well as other issues, it feels a little like Apple has stuck the camera on the back of the phone as a result of force of habit, rather than because it was a good idea.
Moving it to the back would be one way of addressing that.
Fingerprint technology is another area where Apple could be tempted to move. The sensor on the front is accurate, has excellent durability, supports Apple Pay and it has enabled Apple to create a user experience that leaves much to be desired.
As such, moving the sensor to the back would allow Apple to offer a premium look with a better user experience.
Would you switch to the iPhone 7 if the fingerprint sensor was moved to the back?
Kuo also believes Apple will consider a switch to an OLED panel, rather than the LCD used by the iPhone 7. OLED displays are expensive, difficult to manufacture and only found on high-end smartphones. But Apple could bring the premium look to the iPhone in a way that helps it sell new models without dramatically increasing the cost.
This might be more likely with a premium iPhone 8, but it might also see a different range of iPhone 7S models with an LCD screen.
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