Apple registered a record-setting growth in the final quarter of 2020. All business units saw 17%-41% growth and total revenue was a whopping $111 billion. This phase of strong growth is expected to continue in 2021 and beyond. Here are a few insights which support this projection:

• The delayed and staggered launch of the iPhone 12 series saw a record number of sales (and connections) in the final week of 2020. In North America, with supply trying to keep pace with demand, some Pro and Pro Max sales spilled over into January. Many other countries, like China, Taiwan and South Korea, are seeing a more significant spillover into January for the Pro and Pro Max. In addition, if a Fall launch goes back to a September launch, there will also be favorable Q3 comparisons. Finally, channel inventory is lower than last year exiting the quarter, which gives an opening tailwind to the March quarter.
• While the iPhone 12 may be the volume driver in the long run, the Pro and Pro Max have performed above expectations, driving ASPs.
• The increased installed base continues to be a flywheel for service revenues. OS-switching remains low. However, the trend in most regions has been towards iOS. Active iOS devices crossed 1.65 billion during the December quarter. Active installed base has also accelerated. iOS gained 100 million users in 2018 and 2019, and 150 million users in 2020. All Apple product lines saw accelerated growth in installed base.
• There are now over 620 million paid subscriptions across services on the iOS platform. Apple added 140 million paid subscribers during 2020. Service revenues were at an all-time high of $15.8 billion. Gross margin on services improved due to a more favorable mix. Counterpoint estimates Apple Music, Apple Pay, cloud services, and Apple Fitness+ particularly helped the growth. Apple TV+ remains a large opportunity but also the service platform with the largest challenges.
• Counterpoint estimates Apple has grown its iPhone sell-through market share in China from 8% in Q3 to 16% in Q4. Some iPhone sales will spill over to January. In addition, the March quarter is particularly a strong quarter for services because of the Chinese New Year festive season. Service revenues will be helped by the iPhone growth in China.
• In the US, Apple has grown its market share from 45% in Q3 to a record high of 60% in Q4.
• The installed base of iPhones has grown to one billion active users. The spring SE 2020 launch stimulated higher OS-switching than normal. The new low price point helped. In addition, the device was built with latest chip so it could run for at least four years before reaching end-of-life. The refurbished market continues to increase the installed base in even lower price points than the SE 2020. Apple remains the #1 brand in the secondary market by a long mark. The iPhone 12 also drove higher OS-switching YoY.
• It was a record iPhone upgrade quarter. This is partly due to an aged base, but it is also that there was a pent-up demand for 5G iPhones, particularly in China and the US. Regions with significant 5G rollouts planned for 2021 and 2022 will feel this tailwind later. 5G drove stronger volumes and better ASPs during the quarter.
• Hearables and wearables grew about 30% during the quarter. Hearables continue to evolve and will remain on a growth trajectory. Same for Apple Watch. 75% of Apple Watch buyers were first-time buyers. The integrated heart rate function has opened up an enormous number of insights into general health and sleep analysis. The ECG is a work in progress but also will be very valuable. New sensor technologies and health dashboards will continue to drive this space. Apple over-indexes the market on cellular connected watches too, which delights global mobile operators.
• iPad saw its best quarter to date with a whopping 41% YoY growth. Many purchases were for school-from-home and work-from-home. Apple is closely aligned with the education segment and could see further gains in future quarters with iPads purchased as laptop replacements. And this is not just happening in North America. Record-setting iPad deployments within education were also seen in Germany and Japan. A significant refresh is expected in Q2 and Q4, which could also boost sales.
• Mac revenues grew 21% even as Apple launched its first Mac with its own M1 chip.
• Of course, Apple never discusses future products. However, CEO Tim Cook did comment that Apple is at its best when it brings hardware, software and services together. A foldable smartphone or AR/VR headset would be able to draft off of this early integration of software and hardware, which is not yet done by an OEM.