Apple's 'defining moment' is here — and it may mean moving past the iPhone (AAPL)

Apple's slow quarter for iPhone sales may spell trouble ahead for the smartphone.
The age of double-digit growth in iPhone sales may be nearing its end, according to UBS Analyst Steven Milunovich.
But Apple has found ways to monetize its installed base through software and new accessories.
See Apple's stock price in real time here.

The era of double-digit sales growth for the iPhone may be nearing its end.

Apple is reaching a "defining moment," according to UBS Analyst Steven Milunovich, as demand for the iPhone — the device which catapulted the smartphone revolution and the company's earnings growth — slowed this past quarter. The slowdown suggests that the iPhone" supercycle" is dead.

"The iPhone is now mature," Milunovich wrote. "A mature iPhone means that other categories, especially services and other products, will become material to growth."

The supercycle is marked by a fresh wave of customers and upgrades for a new device, like the iPhone X, which did not materialize in the past quarter. In Apple's first-quarter of 2018 earnings report, the company said it sold 77.3 million iPhone units, down 0.9% year-over-year, compared to analysts' estimates of 80.2 million units.

Some of the weakness in iPhone sales came from China, where the iPhone X has failed to woo consumers because it has been perceived as a smaller phone compared to its predecessors.

But despite the slowdown in iPhone sales, Apple made a bigger profit this quarter from its installed base of users who bought additional hardware, software and services. Apple devices and accessories like the Apple Watch and AirPod grew 36% year-over-year, and its services segment grew 18.1% year-over-year.

"Not all is lost — the installed device bases are growing, loyalty is high, the iPhone is gaining share, and Apple is far ahead in wearables," Milunovich said.

Milunovich maintained his price target of $190 per share.

Apple was down 6.2% for the year.