Tim Cook Apple

Apple is still overwhelmingly in the business of selling iPhones, but clearly its growth is going to come from services and the Apple Watch.

And the tech giant is doubling down, particularly in services.

Apple’s product sales fell 9.2 percent in the first quarter, with iPhone sales dropping 17.3 percent to $31.1 billion. The Apple Watch helped pick up some of that slack, but not enough.

Tim Cook, chief executive officer, told analysts the company’s wearables business grew nearly 50 percent in the quarter and is now the size of a Fortune 200 company after just four years — suggesting it drives revenues of over $14 billion. (Aramark, the 200th company on the Fortune 500, has revenues of $14.6 billion).

Although the Apple Watch did not meet the lofty fashion expectations some had for it, it has gained serious share in the market place and has carved out a health-oriented niche that plays into its digital capabilities.

Apple’s services business is much smaller than the gadget side, but is seen as the future. Services sales increased 16.2 percent to $11.5 billion.

In March, Apple made a flashy presentation highlighting expansions in news, games, payments and original content, trotting out Steven Spielberg, Reese Witherspoon, Jennifer Aniston, Steve Carell, Oprah Winfrey and even Sesame Street’s Big Bird to make its case.

By jump-starting the smartphone category with the iPhone, Apple essentially put a portable mall into the pockets of consumers everywhere, one that doesn’t just deliver news, but sells fashions and services up entertainment.

Clearly, the company is now trying to get a bigger piece of the business that flows through that mall.

Apple has plenty of financial cushion as it figures that out.

Even though net income fell 16.4 percent for the quarter, Apple still tallied $11.5 billion. And the firm returned over $27 billion to shareholders through share repurchase and dividends.

Apple’s China business, which sparked some worry earlier in the year for luxury brands pinning their hopes on the country, continued to slip. The tech giant said sales in Greater China fell 21.5 percent in the quarter to $10.2 billion.