Apple is warning that quarterly revenue will decline for the first time in 13 years as growth in iPhone sales slows to nearly zero, raising a question that has hovered over the world’s most valuable technology company for years: how long can the iPhone continue carrying the business?

The company reported record fiscal first-quarter revenue of $75.9 billion and net income of $18.4 billion for the three months ended December 26, but iPhone unit sales increased only marginally from a year earlier. Apple sold 74.8 million iPhones in the quarter, compared with 74.5 million in the same period a year ago.

More striking was the company’s outlook. Apple said revenue for the March quarter is expected to fall between $50 billion and $53 billion, below the $58 billion reported in the comparable quarter last year. If that forecast holds, it would mark Apple’s first year-over-year quarterly revenue decline since 2003.

The iPhone Reaches a New Stage

The iPhone remains the center of Apple’s financial model. It accounts for the majority of company revenue and drives sales of applications, accessories, services and other devices. For years, strong iPhone growth allowed Apple to overcome weakness elsewhere in its product portfolio.

That growth is now slowing sharply. The latest quarter’s 74.8 million iPhones represented only about a 0.4 percent increase from the previous year, the smallest annual gain since the device was introduced in 2007.

The comparison is difficult because the iPhone 6 and 6 Plus triggered an extraordinary upgrade cycle in late 2014. Their larger screens persuaded many existing customers to replace older phones while also attracting users from competing platforms.

The iPhone 6S and 6S Plus introduced improvements including 3D Touch, faster processors and upgraded cameras, but analysts say those changes have not generated the same urgency to upgrade.

China Adds to the Uncertainty

China has become one of Apple’s most important markets, but economic weakness and currency movements are complicating the outlook. Chief Executive Tim Cook said the company is seeing signs of softness in Hong Kong and some other parts of the region even as mainland China remains strategically important.

Apple has expanded aggressively in China, opening retail stores and working with the country’s major wireless carriers. The market’s enormous population and growing middle class make it central to Apple’s long-term growth expectations.

But slowing economic growth, a stronger U.S. dollar and intense competition from Chinese smartphone manufacturers are making the environment more difficult. Companies including Huawei and Xiaomi offer increasingly capable devices at lower prices, while Samsung remains a major global competitor.

Currency effects are also reducing the value of overseas sales when translated into dollars. Apple generates a large share of its revenue outside the United States, so exchange rates can materially affect reported results even when local demand is stable.

Record Profit Does Not Silence Wall Street

The paradox in Apple’s earnings report is that the company is still producing extraordinary profits. Net income rose to $18.36 billion, and revenue reached a quarterly record. Few corporations in history have generated that level of profit in a three-month period.

Yet investors are focused less on the absolute size of Apple’s business than on its future growth rate. The stock has fallen substantially from its 2015 highs as concern grows that smartphone markets are maturing and that Apple does not yet have another product capable of matching the iPhone’s scale.

The quarterly results showed that iPad sales continued to decline, while Mac sales were roughly stable. Apple Watch performance is harder to evaluate because the company combines the device with several other products in a broad reporting category.

Services are growing more rapidly. Revenue from the App Store, Apple Music, iCloud and other services provides a recurring stream tied to Apple’s installed base. The company is increasingly highlighting that business as evidence that its value extends beyond annual hardware replacement cycles.

March Quarter Will Be the Real Test

Apple’s forecast suggests the current quarter will provide the clearest evidence yet of whether iPhone sales have peaked temporarily or entered a more sustained slowdown.

Management said iPhone unit sales are likely to decline year over year in the March quarter. That would be the first such drop since the product’s introduction and would carry symbolic weight far beyond one reporting period.

The smartphone industry itself is changing. In developed markets, most consumers who want smartphones already own them. Devices are improving more gradually, and customers often keep phones longer before upgrading. Wireless carriers are also moving away from subsidies that once encouraged two-year replacement cycles.

Those forces affect every manufacturer, but Apple faces unusual expectations because the iPhone has delivered years of rapid growth at enormous scale. Even modest growth can appear disappointing when investors have become accustomed to much larger increases.

Apple Looks Beyond the Phone

The company is investing in several areas that could reduce its dependence on the iPhone over time. Apple Watch is the most visible new hardware category, while Apple Music expands the company’s role in subscription services.

Apple is also building its ecosystem through Apple Pay, television software, cloud services and health-related applications. Reports continue to circulate that the company is exploring automotive technology, although Apple has not publicly announced a vehicle program.

None of those initiatives currently approaches the financial importance of the iPhone. The challenge is that creating another product category of comparable scale may be unrealistic. The iPhone combined communication, computing, photography, entertainment and internet access into one device and then benefited from the global migration to smartphones.

Apple may instead need to build a collection of businesses that together offset slower phone growth. Services, wearables and new devices could create that mix, but investors will want evidence that they can become large enough to matter.

A Company Confronts Its Own Success

Apple’s current problem is partly the result of its extraordinary achievements. With hundreds of millions of iPhones already in use and annual sales measured in the hundreds of millions of units, maintaining double-digit growth becomes mathematically difficult.

The company also faces a comparison with the iPhone 6 cycle that was unusually strong. That means a decline this year does not necessarily prove the franchise is weakening permanently.

Cook has emphasized Apple’s installed base and customer loyalty, arguing that the long-term opportunity remains substantial as people upgrade older devices and as smartphone adoption expands in developing markets.

But the next few quarters will test that argument. Apple can no longer rely on the assumption that each new iPhone generation will automatically produce rapid unit growth.

The company remains immensely profitable, financially strong and deeply embedded in consumer technology. Yet its latest earnings report marks a turning point. For the first time in more than a decade, Apple is preparing investors for shrinking revenue, and the reason is clear: the iPhone growth engine that transformed the company is finally showing signs of reaching its limits.