Apple (NASDAQ:AAPL) sold its billionth iPhone back in 2016, but there's a big difference between cumulative unit sales and how many are actually in use. Since most iPhone purchases are upgrades nowadays, the installed base grows at a much slower pace. The company gave its first official disclosure in early 2019, when the global iPhone installed base hit 900 million.

"We plan to provide information on the iPhone install base as well as total install base on a periodic basis," CFO Luca Maestri said in January of that year. Other than vague comments about the installed base hitting all-time highs, Apple hasn't given investors a formal update on it since. One analyst thinks that key metric has now hit the 1 billion milestone.

Tim Cook holding up the billionth iPhone onstage in front of a crowd

CEO Tim Cook holds up the billionth iPhone in 2016. Image source: Apple.

1 billion and counting

Independent analyst Neil Cybart at Above Avalon published a research note this week estimating that Apple topped 1 billion iPhone users last month. The Cupertino tech giant stopped disclosing unit volumes a couple years ago, in part because investors and analysts were too focused on that metric, which doesn't fully capture the health of the core iPhone segment.

Instead, Apple has successfully shifted the narrative -- and investor attention -- to emphasize its booming services segment, which is built in large part on monetizing the installed base with paid subscriptions, digital content sales, and more. That's why the Mac maker has been introducing so many new first-party services and now discloses how many paid subscriptions are being billed across its platforms.

"In recent years, the pace of growth in the iPhone installed base has slowed," Cybart wrote. "Much of this slower growth is due to high smartphone penetration and Apple having already successfully targeted the premium end of the smartphone market."

Despite that deceleration, the analyst estimates that Apple is still adding around 20 million to 30 million new iPhone users every year. The iPhone tends to act as a gateway product, introducing new users to Apple's expansive ecosystem of hardware and other services.

What comes next

Apple will continue to focus on three areas for the iPhone, in Cybart's view. The company will keep pushing the envelope with the iPhone camera, strengthening the overall value proposition by extending the average iPhone's life span, and adding more to the feature set so that the iPhone can do just about anything that users need it to.

"Odds are increasing that Apple has not experienced peak iPhone," according to the analyst.

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