If Apple wants to keep its grip on the cash mountain it makes every year through 2022, it is going to have to ramp up on services.

Analyst Gene Munster of investment firm Piper Jaffray has decided to call it quits and follow former PJ colleague Andrew Murphy and current colleague Doug Clinton to Loup Ventures, a capital lender for augmented-, mixed-, and virtual-reality companies. But before that’s to happen, he has penned his 874th and last note on Apple for his employer on where the company heads toward in the next five years.

Munster claims that Apple will need to execute a drastic change in hardware attitude in favor of software — perhaps in the form of shifting margin padding on products from iPhones to AppleCare, so to speak. Investors have been on a rough, if sturdy branch with Infinite Loop the past couple of years, so it’ll take some convincing to see if the company is deserving of more money.

The analyst thinks that first confidence flags will come up when services makes up 30 percent of total revenue and then a full flight will come in at 50 percent. While Apple has hit its own targets for service revenue, as of last quarter, services made up 13.4 percent of total revenue.

He does estimate that the iPhone 7 will see a better sales run outside of the holidays (where it is currently said to be on the downtrend) with fiscal Q2 and Q3 beating the Street’s estimates. The decennial iPhone, with flashy glass curves and an OLED display, will achieve growth either side of 10 percent and will balloon unit sales for fiscal 2018 to 170 million.

Multiple big ticket features and products are in the pipeline, too, Munster predicts, such as AR, MR and VR applications and accessories for the iPhone. There’s also that Apple Car — or, lacking that, an autonomous car software platform — that might come in the middle of his forecast range.

The investment note, obtained by AppleInsider, ends with a personal touch from the soon-to-be venture capitalist:

The experience was rough, but using the iPod gave me a sense of joy I never had from any other product. [Apple] did it with the iPod and recreated that joy with the iPhone. That magic is a big reason why we’ve been unwavering bulls on Apple for almost the entire time we’ve covered it.

While Apple stock is unlikely to replicate the success it enjoyed over the past twelve years in the coming twelve, the company can recreate that magical feeling with some future product and will enjoy watching the stock rise when they do.

Image: LinkedIn

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