Here's Why Apple Is Sitting Pretty in Hardware Sales

iPhones are still the Apple of kids' eyes. 

Apple Inc.'s  (AAPL) growth in hardware sales may be plateauing, but its hardware business can still be a cash cow as younger generations still seem to favor Apple devices over others. "Apple rose to No. 1 on the 'must have' brand list, a position it last held in 2013," Evercore ISI analysts wrote in a client note that showed results from its survey of teens.

In fact, 87% of people ages 13 to 23 said they'll buy the iPhone for their next smartphone, with Samsung Electronics coming in at No. 2. Apart from iPhones, "Apple did particularly well in phones, tablets, and laptops" in the survey, Evercore said. 

There's no question Apple is hoping its next growth driver will be in services, rather than hardware, as the smartphone market is set to slow down. Still, Apple wants to maintain its dominance in hardware, and doing so doesn't just ensure a stable stream of cash flow, but it means it can reinvest into those services-oriented spaces, like Apple Music or videos.

"As long as they continue with the hardware ecosystem, Apple has some competitive edge," Jun Zhang, analyst at Rosenblatt Securities, told TheStreet. Others agreed. "The expensive fixed costs {for Apple} are associated with getting the phones into the hands of consumers, but once that happens, Apple can focus on keeping Apple users moving through different services," Josh Blechman, director of capital markets at Exponential ETFs, told TheStreet. 

It's still worth a mention that Apple keeps working on new products in hardware. Apple is releasing a swath of new products on Wednesday, Sept. 12, at the Steve Jobs Theater. While it's anybody's guess how well those products will sell, they could add a little extra value to the giant's bottom line. 

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Apple's market cap recently reached $1 trillion. Shares are up about 0.3% in early trading on Tuesday.

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