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Earlier this week, Apple showed everyone that they are still generating enough revenues in the very competitive technology market. The company's iPhone sales are up 35 percent from last year. Apple says more people are switching to the iPhone from Android now than ever before. The company has a record US$ 203 billion in cash reserves.

The problem is, despite all the strong marketing stance, Apple's stock still tanked globally. Why? Because of unmet expectations.

Despite the company's glowing numbers, there was one key metric that fell below Wall Street's expectations: The number of iPhone units sold.

Analysts and industry watchers had expected Apple to sell 48.8 million iPhones. The whisper number was even more ambitious at 50 million units. Instead, Apple sold 47.5 million iPhones during the three-month period ending in June.

Apple says this is because it tried to avoid having excess inventory in the channel so it shipped 600,000 fewer iPhones than usual. However, shareholders' reactions to the news indicate just how vital the iPhone is to Apple's business. To them, it seems, Apple is the iPhone.

Apple even added a new sentence to the risk-disclosure section regarding quarterly revenue and operating-results fluctuations in its 10-Q filing following earnings. The addition, which Morgan Stanley first spotted, seems to refer to the iPhone:

"Further, the Company generates a majority of its net sales from a single product and a decline in demand for that product could significantly impact quarterly net sales."
A quick look at Apple's numbers shows exactly why analysts and investors are paying such close attention to the iPhone. It's Apple's biggest source of revenue. In fact, it accounts for more than half of Apple's total revenue, as the infographic below shows.

Apple Infographic

The iPhone has been the most important product driving Apple's growth over the past several years. The iPhone's revenue as a percentage of Apple's total sales has grown exponentially since 2007.

The lower-than-expected number comes after analysts have been expressing a specific concern around the iPhone for months: Has it peaked? Can Apple continue to innovate the way it has with the iPhone 6 and 6 Plus? Apple's newest iPhones have both been massively successful and have led the company to break previous iPhone sales records.

But analysts have worried that this will make it harder for Apple to show that the iPhone is actually growing in the future. This is what Wall Street usually refers to as the "comps" problem.

"[The] iPhone obviously drives the profits at Apple, and so I think the fear of that golden goose coming under pressure is always there," Cantor Fitzgerald's Brian White said to Business Insider.
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