Technology

Apple's decision to stop breaking down unit sales of iPhones and iPads is a 'defining moment'


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.

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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.

Given how intimately Apple is connected to the iPhone, Srivatsa said it is going to take some time for investors to get on board with the idea of the company expanding more into its services business.

“Every discussion on Apple is always about their iPhone. I think to start talking about the Apple Pay or the iTunes or the software side and the services side of the business — for that message to really get across to investors and become the main theme of owning Apple — it’s going to take some time,” he said.

As a result, Srivatsa said he expected Apple’s stock will likely go sideways or trade down for a while.

In September, the tech giant was cleared by regulators to complete its purchase of music identification app Shazam that would likely boost Apple Music and Siri as it takes on streaming giant Spotify.

Apple’s subscription service boasted 50 million active users in May, though the company hasn’t offered an official update since. Spotify has 83 million paying subscribers and about 100 million unpaid users.

— CNBC’s Sara Salinas contributed to this report.

Watch: Steve Jobs explains the first iPhone to CNBC in 2007

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