If you look at the smartphone market over the last few years and Apple's smartphone sales,

it's very clear that the smartphone market is maturing,

and each additional iPhone is a smaller incremental upgrade than the prior one.

The iPhone X, the flagship $1000 phone that was launched this week—

it's beautiful, it does have some new features associated with it,

but a lot of folks are saying,

"Hey, it doesn't seem that much better, I'm happy with the 8, and we'll wait on it."

So, there is, I think, within smartphones, a maturing.

We certainly see that in sales, but there is hope for Apple and other smartphone vendors.

What Apple has managed to do is remarkably create lock-in for its ecosystem.

Not just its devices, it's not just competing on the features of the devices,

it has locked Apple users into the iPhone and iOS ecosystem.

This gives Apple enormous power.

And if you look at where Apple's growth is coming from,

it is actually the services business now.

Services business has grown steadily the last many years, in terms of quarters.

That is expected to continue,

and in fact, one Wall Street analyst, Katy Huberty at Morgan Stanley,

thinks that Apple is on the verge of launching the next big thing—

which is, in her view, augmented reality.

There has been huge hype around virtual reality and other technologies over the last few years,

but in terms of where the rubber meets the road,

what's actually happening, it looks like the excitement has moved to augmented reality.

Morgan Stanley has a big note that we'll explore in a future Bottom Line segment,

talking about what this could be.

But Morgan Stanley believes that

augmented reality and the services and apps associated with it

could ultimately drive Apple to $250 a share.

So, what normally happens in consumer electronics is that

you have relentless downward price pressure on whatever the gadget happens to be.

Apple has miraculously managed to avoid that thus far,

they have now created a very wide range of iPhones, priced from $350 all the way up to $1000.

So there is a price point for almost everybody within that,

and they have managed to tie a services business that is growing steadily and rapidly to that.

So even though, I would argue, this is the last big iPhone launch,

there is (are) many good times ahead for the iPhone ecosystem, smartphones in general,

and it comes down to this services line.

So, well done, Apple.