Apple is hoping the worst is over for iPhone sales.

The tech giant Tuesday announced the biggest-ever quarterly sales drop for its most profitable device.

IPhone sales tumbled a bigger-than-expected 17 percent last quarter.

Demand for the smartphone - still hampered in China as it comes up against cheaper home-grown competition from Huawei and Xiamoi.

SOUNDBITE (ENGLISH): REUTERS TECH CORRESPONDENT STEPHEN NELLIS, SAYING: "The iPhone and China are still tremendously important to Apple.

Even as the smartphone business matures and the iPhone becomes a smaller component of Apple's revenue picture overall, it's still the biggest component and even though China is not Apple's single biggest market, it's one that they can not avoid to lose." Apple suffered a company-wide drop in both sales and profits during the quarter, although the declines were not a bad as feared, lifting the stock in after-hours trading.

Investors also took comfort as Apple continues to make gains with its services business.

SOUNDBITE (ENGLISH): REUTERS TECH CORRESPONDENT STEPHEN NELLIS, SAYING: "The one lingering question is that we still don't really know what the make up of that is.

So its got a lot of business that are really quite different from each other.

There's the app store, which is mostly subscriptions and purchases of apps, but then there are things like Apple Music that's essentially a content subscription.

So, even though that business is very good right now and growing, investors really want to know more about the exact make up of it." That unit posted a 16 percent jump in sales.

And Apple is investing heavily to keep that number growing.

It unveiled a new suite of services in March, including a star-studded upgrade to Apple TV, a credit card, and a gaming service all aimed at pulling in new cash to offset declining iPhone sales.

As for its cash cow, Apple isn't expecting iPhone sales to decline much further.

It gave Wall Street an upbeat outlook on the future - hoping price cuts in China and signs of easing tensions between Washington and Beijing give sales of the iPhone a lift.