This Tuesday, Sept. 1, John Ternus will take over as the CEO of Apple. While his first day on the job will not be his first day at Apple, it will be his first day in one of the most coveted, high-pressure, and culturally sensitive CEO positions in the world. His job is to continue Apple’s economic growth. That means looking beyond the annual iPhone retail cycle.
iPhone Saturation Limits Apple’s Growth
Apple’s flagship iPhone division faces global market saturation, limiting the hardware platform’s ability to drive double-digit top-line expansion under incoming CEO John Ternus.
One of the biggest challenges is the critical role the iPhone has played in Apple’s growth; in 2026, there are no major growth opportunities for the iPhone platform to sustain the financial engine’s previous pace.
The iPhone will remain, as will the iPad, the Mac, the Apple Watch, and the current portfolio. Apple will continue to find gains through tighter hardware integration, improvements to Apple Silicon, and further optimisations. Hardware markets where significant growth may still be found are smaller and less impactful on Apple’s bottom line. The recent unlocking of the mid-range laptop market is one of those, as is the potential of a foldable iPhone in the Chinese market, but both are saturated in their own way.
Subscription Models Replace iPhone Sales Cycles
Apple is re-architecting the iPhone from a transactional hardware unit into an ecosystem gateway designed to capture recurring, high-margin software subscriptions.
Can Apple move from a primarily hardware-based business toward a software and services business? The iPhone has always been seen as Apple’s key product, and it will continue to be so; however, growth will no longer come from simply selling more iPhones. Instead, it is likely to come from selling iPhones as a gateway to sell more subscription services.
Subscription services offer more predictable value to the market; they naturally create higher user retention rates and can be less volatile than selling hardware, as we have seen over the last 12 months. Supply disruption can have a significant impact on the hardware market, and there is little manufacturers can do to mitigate it. Yet if you have consumers locked into subscriptions, you not only have ongoing revenue but also a much stronger connection to the user.
Subscription services, though, are a dime a dozen. Apple needs to work hard to stand out both at initial sign-up and for recurring payments. Apple Music has Spotify as its main rival, Amazon Music is a persistent competitor, and many other smaller subscription-based music services remain available. Apple TV certainly has prestige dramas, but it is limited in scope when compared to the likes of Disney, Paramount, and Netflix; it could be found wanting. Alternatives to Apple Fitness Plus, Apple News Plus, and Apple iCloud Plus are also easy to find.
John Ternus Can Prioritize Recurring Apple Services Revenue Over iPhone Hardware
Securing Apple’s valuation requires John Ternus to prioritize subscription monetization over hardware volume as device replacement rates plateau globally.
There is a symbiotic nature to Apple’s software-based services and hardware, but the balance will have to change. Without significant growth in hardware sales, software revenue will need to be found elsewhere—in new markets, on other devices, and in a much more competitive market space.
If John Ternus is looking to secure Apple’s financial future in the short and medium term, the current state of the market suggests that boosting subscription-based revenue will be far more important than any expected advances in the iPhone.
