The U.S. tech giant on Tuesday turned in a 9% year-on-year slide in net sales for fiscal 2016's final quarter ended in September. Apple marked a third straight quarterly drop and its first annual revenue decline in 15 years. However, the company forecasts sales to rise as much as roughly 3% for the current October-December period.

"Fiscal 2016 saw more customers switch from Android to iPhone than ever before," Apple CEO Tim Cook said during Tuesday's conference call. "Demand continues to outstrip supply" for the newly released iPhone 7 models.

Sales had suffered amid criticisms that Apple's latest smartphones lack innovation. Then South Korean rival Samsung was forced to contend with the defects in the Galaxy Note 7, which have caused even replacement phones to catch fire. Samsung permanently ended production and sales of the device this month. Taiwan's KGI Securities, a noted Apple watcher, predicts over 5 million current or potential Note 7 customers will purchase iPhones instead. That scale would be equivalent to over 10% of unit sales during the July-September quarter.

In America, where Chinese makers of downmarket smartphones have marginal share, Apple and Samsung effectively hold a duopoly in the high-end device market. In many cases, an iPhone would be the first choice to replace old Samsung phones absent available updated versions, analysts say. To keep its remaining customers, Samsung is offering Note 7 owners a trade-in program to get next year's new version for half the price.

Meanwhile, Apple is further innovating smartphone quality control and internal designs -- areas that typically do not grab headlines but contribute to device functionality. The aim is to increase market share by ensuring quality.

The first wireless chip designed by Apple powering the iPhone 7's Wi-Fi earphones is one result of that push. Apple also is standardizing core components and decentralizing suppliers. Apple hired Intel to make communications chips for the iPhone 7 along with fellow American chipmaker Qualcomm, which had been the lone procurement source for five years.