Apple (NASDAQ:AAPL) continues to be a growth engine. Although the company's top line is now pushing above $233 billion for fiscal year 2015, the company still grew its top line nearly 28% on a year-on-year basis, mostly on the back of a successful prior-gen iPhone 6 and iPhone 6 Plus launch, and strong demand from heavily populated China.
Looking forward, the current generation models (iPhone 6s and iPhone 6s Plus) appear to be selling briskly, as well. While the recently completed fourth quarter only had a few days of iPhone 6s sales, Apple reported 13-million new units sold versus last year's figure of 10 million. But the new units have their work cut out for them, as the iPhone 6 and iPhone 6 Plus pushed Apple's full-fiscal year iPhone-related revenue up 52% on a year-on-year basis, providing the vast majority of total revenue growth for Cupertino.
On the other hand, the rest of Apple is a below-average company. This part of the company isn't growing at all, and actually presents headwinds to Apple's 28% headline clip. Here's a visual representation of the divergence between Apple's iPhone business and the rest of the company on a quarterly basis.
Breaking down the quarters
As you can see from the chart above, Apple is at danger of becoming a single-product company. As a result of tremendous demand, Apple's iPhone has grown from 56.4% in the first fiscal quarter of 2014 to 62.5% in the recently completed fourth quarter, actually trending down after setting a high-water mark of nearly 70%.
Compare that to the rest of the company, however, which has experienced year-on-year drops in two of the last four quarters. Mostly on the back of slowing iPad sales, the company reported a non-iPhone first-quarter revenue drop of 6.8%, followed by a second-quarter decrease of 9.5%.
Things improved throughout the second half of the year, as the company grew its non-iPhone revenue by 3.1% in the third quarter, and by a stronger 4.6% in the recently completed fourth fiscal quarter. The fourth quarter was aided by strong year-on-year growth in Apple's catchall other services product category, which grew 61% on a year-on-year basis, presumably strongly helped by Apple Watch. And while this may signify a strong path going forward, the second half was not enough to offset the first, and Apple actually recorded 2.5% less non-iPhone revenue this fiscal year than the last.
Will this reverse going forward?
For Apple investors, there's a fear these two fortunes will soon reverse. After all, the prior-gen iPhone 6 and iPhone 6 Plus models led to massive revenue increases; it may be hard for Apple to match that with an off-year model. Meanwhile, Apple continues to bring new products and services to the fold -- the aforementioned Apple Watch and Apple Music -- that will lead to favorable year-on-year comparisons. The problem for investors is these product categories are not created equal as it relates to the headline number.
That's because, as earlier mentioned, Apple has become mostly a single-product company. On a full-year basis, aggregating the totals above, Apple reported $155 billion in iPhone-related revenue versus $78 billion for the rest of the company. In the event Apple's iPhone-related revenue slows, the company will need a Herculean-like effort from the rest of the company to make up for it. Although it seems Apple is working on new products, with the new Apple TV on deck, Apple remains a tale of two companies.
Will Apple's iPhone-related revenue dramatically slow (or fall)? That's an entirely different question; but if it does, don't count on the rest of the business to make up for it.