Despite the lower-than-expected unit sales, Cook told CNBC that the iPhone 7 Plus sales were “extremely strong.”

“We are having significant growth rates beyond what we ever dreamed of,” Cook said.

Services revenue rises 18 percent year over year

Meanwhile, Apple has invested in new content, like a Tribeca Film Festival movie, for Apple Music. It’s part of a growing source of revenue for Apple, services, which includes digital content, AppleCare, Apple Pay, licensing and other services.

“In services, the App Store was up 40 percent and our developer community is growing by over 20 percent. There is a lot of momentum,” Cook told CNBC.

Cash pile hits $256.8 billion — and tax rate forecast to fall to 25.5 percent in fiscal Q3

Apple’s massive cash hoard could become a major windfall for the company under the new presidential administration, which campaigned to cut taxes on the repatriation of cash held overseas.

Cook told CNBC a rate between 6.5 and 10 percent “seems rational” for a one-time tax holiday on foreign-earned income.

China sales fall 14 percent from last year

Apple’s biggest Asian revenue source has been under pressure, as the strength of the Hong Kong dollar dampens shopping from mainland China. Sales fell 12 percent year over year last quarter.

“In China, we did similar to last quarter,” Cook told CNBC’s Josh Lipton. “We have now in the first half of this quarter had a dramatic turn versus the second half of last year. We do have more work to do. In China, the Mac and services … grew strongly. We do have good factors. We have to keep working that.”

It’s a market where Apple faces ever-growing competition from local brands like OPPO, Vivo and Huawei. India is another growing market where Apple has to face down brands like Samsung and Xiaomi.

Warren Capital estimates that there was a nearly 2 percent decline in overall smartphone activations in China during the first quarter of this year, when companies like Xiaomi were favored.

Apple Watch and other products

  • Mac: Units grow 4 percent year over year, revenue pops 14 percent year over year
  • iPad: Units fall 13 percent year over year, revenue falls 12 percent year over year
  • Other products ( Apple TV, Apple Watch, Beats products): Revenue rises 31 percent year-over-year

Apple’s earnings report comes after Apple released a new version of its 9.7-inchiPad, and a special edition of the iPhone 7 and iPhone 7 Plus. It also added new watch bands for spring, with colors like berry, pollen, sapphire, azure, orange and red.

Macs, iPads and Watches make up a relatively small amount of Apple’s business — the company has not historically even disclosed Apple Watch sales. But it’s an area where Apple competes in the educational market with Chromebooks, and in the professional market with Microsoft’s new Surface line.

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