"We see increasing value in the Apple platform, particularly through services monetization," Huberty writes. Although "over the last five years, the vast majority (86%) of Apple's 8% annual revenue growth was driven by iPhone sales, it is through monetization of Apple's Services business that we see the company still generating mid single digit revenue growth."
Huberty estimates that about 60% of revenue growth is currently attributed to services. That, alongside wearables, "will drive almost all of Apple's growth over the next five years."
Revenue from services is at about $30 per device, up from $25 two years ago; however, Huberty says that "this metric under estimates the long-term revenue potential." Since most Apple users don't pay for services, revenue for 'active' users is well above that, possibly double. Huberty thinks that number could approach $100 or more in the future.
Morgan Stanley lists a few areas that they believe are not fully monetized:
● Apple Music has grown considerably, and yet only 2.9% of Apple users have it, currently.
● iCloud subscribers are growing, and Apple is launching two new data centers in China.
● Apple Pay is in 50% of US retail locations, and usage is still low.
Check out the charts below for more details...