So sales essentially flat, but margins up substantially… offering less innovation and product for the same price.
Margins are up because services are now over 19% of Apple's revenues. Services have gross margins of around 73%.
Your point about innovation might be true but you get way more product for the same price. Examples: the iPhone 15 Pro costs the same (without accounting for inflation) as the iPhone X. This makes the iPhone 15 Pro much less expensive (about 25%) than the iPhone X.
The base 15" mid year 2010 MacBook Pro launched at $1800 ($2500 in Dec 2023). The base 16" MacBook Pro costs $2500, which is way more computer for the money. The 14" MBP is the better comparison though, although the screen is smaller it is much higher resolution and much nicer. That computer starts at $2000 for the base "pro" model.
Sure, tech generally gets cheaper over time, but Apple is most likely keeping hardware prices somewhat lower, in part due to high services margins. Apple also increases some of the hardware margins by its high upgrade costs -- base models will have lower margins and the upgrades pull margins up.
What this means is margins are up for many reasons. Here is a translation of what Apple reported about margins:
Apple's overall profit margin before deducting operating expenses was 45.9%, which is a 0.7% increase compared to the previous period. This increase was mainly due to more efficient use of resources and a better combination of products and services sold. There was a slight negative impact from changes in currency exchange rates (meaning the dollar lost ground on average, which hurt Apple's finances a bit).
The profit margin for products was 39.4%, a 2.8% increase since the last period. This was due to more efficient resource use and selling more products with higher margins (e.g., upgrades at time of purchase), with a small reduction due to currency exchange rates. The profit margin for services was significantly higher at 72.8%, which is a 1.9% increase from the last quarter, mainly because the company had more people subscribing to high margin services (Apple doesn't specify what those are).