Apple is moving from a hardware to services business, says analyst

Shannon Stapleton | Reuters

Apple CEO Tim Cook speaks during an Apple launch event in the Brooklyn borough of New York, U.S., October 30, 2018. 

Apple’s decision to make major changes to its reporting structure from the next quarter — and stop reporting the break-down on unit sales — is a “defining moment” in the company’s history, according to an analyst.

The iPhone-maker is making a transition from being a big hardware player to a services business, Jay Srivatsa, CEO of Future Wealth, told CNBC’s “Squawk Box” on Friday. He explained that most of the tech giant’s hardware products in recent years have been “evolutionary” instead of “revolutionary.”

Apple reported earnings for its fiscal fourth quarter Thursday that beat Wall Street estimates on earnings and revenue. But shares fell after the company missed shipment estimates on iPhones, offered light guidance and said it will no longer break out individual sales numbers for the iPhone, iPad and Mac.

“Barring a major introduction of a new product, like an iPhone, in the next few years, we’re not going to see the company’s hardware revenues grow in any big fashion,” Srivatsa said. “It becomes a services business. I think part of the reason why they’re no longer going to split it up is because of that transition that the company’s going to go through.”

“I think this is a defining moment in the company’s history going forward,” he added.