The iPhone hasn't been the best in 5 years, but who cares, says Apple analyst

  • Other smartphone makers have had superior hardware for years, analyst Toni Sacconaghi tells CNBC.
  • But, "Apple has continued to hold or in some cases gain share," he says.

Apple hasn't had the best smartphone on the market for five or six years, Bernstein senior research analyst Toni Sacconaghi told CNBC on Tuesday, but that hasn't mattered.

In an appearance on "Squawk Alley," Sacconaghi, typically an Apple skeptic, said HTC and Samsung have had superior hardware in their phones for about half a decade.

But, "Apple has continued to hold or in some cases gain share. And I think it's a combination of brand, which is particularly important worldwide (and) ecosystem because iOS is familiar and easy to use. ... As well as industrial design," Sacconaghi said.

"I believe those will continue to be advantages for Apple," he added.

Sacconaghi spoke after Apple returned to growth in its fiscal first quarter as it sold more expensive iPhones after a less-than-stellar year. In 2016, it reported three straight quarters of lower year-over-year sales, adding up to its first yearly decline since 2001.

Wall Street now anticipates the 10th-anniversary release of the iconic device in September, which is expected to have a new edge-to-edge display, faster data speeds and wireless charging, among other hardware improvements.

Apple aearlier this month announced the new mobile operating system changes coming to the iPhone in the fall.

On service revenue, Sacconaghi said the tech giant may struggle with its target to double it over the next four years.

"That would be taking annual services revenue from $24 billion to $48 billion. That's a really aggressive target to do in four years," he said. "To give you a sense, Netflix is a little over $10 billion, so you'd have to be adding two, two and a half Netflix's in terms of annual revenue."

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CNBC's Anita Balakrishnan contributed to this report.