Analysis: Apple (Nasdaq: APPL) shares took a hit Tuesday after the company remained coy about smartwatch sales, but the iPhone remains a strong core. Analyst Daniel Callahan at Technology Business Research spells out why he believes Apple remains strong.

HAMPTON, N.H. – Global sales momentum of the iPhone led Apple to another record quarter for revenue

Stellar sales of the iPhone in 2Q15 led Apple to grow its revenue to a record breaking $49.6 billion, two full quarters after the introduction of the very successful iPhone 6 and Plus, further solidifying Apple’s leadership in mobile devices and demonstrating to the world that it isn’t nearly close to peaking.

The primary contributor to Apple’s success is again the iPhone with unit shipments increasing 35% year-to-year to 47.5 million and segment revenue climbing a staggering 59% year-to-year to $31.3 million.

TBR believes the iPhone is the foundation to Apple’s entire device ecosystem. Humorously labeled with the moniker the “iPhone company” at TBR, we believe that Apple’s other businesses are secondary or supplementary to growing iPhone revenue.

Phenomenal performance in APAC provided iPhone sales throughout 2Q15 which is traditionally a quieter quarter for the company. Apple recorded year-to-year growth in Greater China by 112% showing the phone’s continued uptake in the region, allowing the China to quickly outpace Europe, which has long had access to the phone, in revenue performance.

China isn’t the only success story for the second quarter, however, with all regions showing extremely healthy year-to-year growth with nearly all 10% or above for 2Q15. The Americas, the region that contributed 40.7% of Apple’s total revenue this quarter and has had access to the iPhone 6 for over half a year, still grew 15% year-to-year in 2Q15.

iPhone success is trickling down to Apple’s supplementary offerings as the growth of users in the iOS ecosystem benefit Apple’s application sales and services. Apple services, which include iTunes and application sales, grew 12% year-to-year in 2Q15. TBR believes once users are outside of the three month trial period for Apple Music in 3Q15 this segment’s growth will be further bolstered by the many iPhone users who prefer to be inside the Apple ecosystem for streaming music.

Other products also saw substantial growth in 2Q15, 49% year-to-year, which TBR attributes to Apple Watch sales. TBR believes Apple sold 3-3.5 million units, and generated $1 billion in revenue. However, TBR expects that this success won’t be sustained except an uptick during the coming 4Q15 holiday quarter. Those that wanted it bought it, and sales will slow until Apple can offer a substantial update to refresh purchases.

Apple’s Mac business again proved to move independently of the contracting PC market, with unit shipments growing 9% year-to-year to 4.8 million and revenue growing 9% year-to-year to $6 million. Apple noted that growth was driven by favorable reception of its newer lines of MacBook portables. Despite its success, Apple has chosen to play only in the premium PC market, limiting its market share. However, it will allow the company to deliver better margins than those of PC vendors.