Apple had a phenomenal 2015 as it clocked US$235 Billion in revenues up from US$200 Billion in 2014. Apple’s cash on hand has also grown from US$178 Billion to US$216 Billion in just four quarters.

We analyze Apple’s performance for the full year in five charts:

Exhibit 1: Apple Revenues By Product Segments & Total Margins

• Apple’s 2015 revenues grew by 18% YoY, mainly driven by iPhones & services segments
• iPhone continues to be the linchpin contributing to 66% of the revenues. i.e. 2/3rd of the revenues
• The calendar Q4 2015 was the best ever iPhone quarter for Apple as it registered highest ever iPhone shipments, Revenues and ASP.
• iPhone ASP at the end of Q4 (Oct-Dec) climbed to US$691
• iPhone 6 has been the best selling smartphone model globally in our country-level monthly model sales tracking
• According to our quarterly tracker, Apple iPhones continues to capture almost 40% of the smartphone industry hardware revenues
• Apple still continues to command the best ever gross margins for a CE hardware company on the planet. Apple ended the year with 40% Gross margins and 30% operating margins.

Exhibit 2: Apple Revenues Growth By Product Segments 

• While iPhone saw a tremendous, above the market growth in 2015, allowing Apple to capture 15% share of the smartphone market by volumes
• The iPads & Macs growth are slowing down for Apple and so has been true for the entire large form-factor computing devices segment as consumers spend more time on smaller handheld devices – smartphones.
• In addition to iPhones, Apple’s services business and accessories (includes Apple Watch) continues to grow at a rapid clip.
• Apple also crossed an important milestone with more than 1 Billion Apple devices of Installed Base (incl. Macs, iPods, iPhones, iPads, Apple TV & Watch)
• The growing IB of Apple devices ecosystem signals importance of “Services” to fuel the ecosystem and becoming an important segment for Apple
• We predict services business will surpass iPad or Mac hardware revenues in 2016

Exhibit 3: Apple Revenues Services vs iPad / Macs 

• We estimate services business clocked $20B+ revenues with 84% of the revenues coming from active Installed base
• Apple’s foray into video & VR content in coming years will expand this segment even more.
• Apple’s huge installed base will generate enough scale moving forward to make the segment more profitable that any other pure services company
• Apple Pay also remains a big factor to catapult the revenues further as the infrastructure and partnerships rolls out to more countries

Exhibit 4: Apple Revenues By Regions

• 2015 was a phenomenal year for Apple’s growth and majority of the growth came from Greater China

• During the year and some of the quarters, Greater China’s contribution to Apple’s revenue has gone to as high as 29%
• Apple is fighting for  the top spot with Huawei to become the number one smartphone brand in China
• Apple hopes to still continue to grow more in China wooing sizeable middle class consumers with highly aspirational products from iPhone to Apple Watch
• Apple would like to replicate this growth story into other potentially bigger emerging markets such as India, Indonesia, Africa and so forth.

Exhibit 5: Apple Revenues Growth (%) By Regions

• While 2015 has been a phenomenal year for Apple, but the most recent quarter also signals why investors and even Apple should worry.
• The overall growth in the best ever quarter for Apple has fallen from its peak and it will be tough for Apple to best its own performance as there is a ceiling to premium market
• This signals Apple to look to newer segments for growth, while Apple Music, Apple Pay and Apple Watch are steps in the right direction but being a hardware design company at the core, newer segments such as AR/VR and Automotive beckons to rechart the growth curves
• The R&D trend line remains flat for Apple which means we should expect greater spend this year to help Apple enter newer segments in 2017/18/19

In summary, a record quarter, solid position from operational performance, ecosystem traction perspective but the growth ceiling in key segments such as iPhone, iPad & Macs has reached warranting newer product categories to grow at the same pace.