Anduril Partners With Meta on Military Headsets, A Headset Drought?, Apple Is Needed (Once Again)
Hello everyone. We will kick off today’s update with an interesting tie-up between Anduril Industries, a U.S. weapons manufacturer, and Meta. The discussion will then turn to a few broader points regarding the headset industry.
Let’s jump right in.
Anduril Partners With Meta on Military Headsets
In a press release issued on May 29th, here’s Anduril:
“Anduril and Meta are partnering to design, build, and field a range of integrated XR products that provide warfighters with enhanced perception and enable intuitive control of autonomous platforms on the battlefield. The capabilities enabled by the partnership will draw on more than a decade of investment by both companies in advanced hardware, software, and artificial intelligence. The effort has been funded through private capital, without taxpayer support, and is designed to save the U.S. military billions of dollars by utilizing high-performance components and technology originally built for commercial use.
This partnership comes at a pivotal moment in the evolution of national defense. America’s national security has benefited from U.S. technological leadership at every phase of the computing revolution, from the first microchips and PCs to today’s internet and mobile devices. As a new era of computing takes shape—built atop AI and body-worn devices—Meta and Anduril are committed to maintaining America’s technological edge while reinforcing our economic and national security.
‘Meta has spent the last decade building AI and AR to enable the computing platform of the future,’ said Mark Zuckerberg, Founder and CEO of Meta. ‘We’re proud to partner with Anduril to help bring these technologies to the American servicemembers that protect our interests at home and abroad.’”
My initial reaction to this news: Meta is willing to further dilute its HW focus, which is already diffused across what are likely too many unreleased products and categories, to now work on military technology with a weapons manufacturer. Across Silicon Valley, the concept of focusing remains highly underrated. Instead, accolades and applause are being handed out far too easily to companies that simply announce things.
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OpenAI COO Talks Screenless Devices, OpenAI’s Strategy Document From 2024, Apple Appeals EU Interoperability Rules
Happy Tuesday.
My original plan to finalize Monday’s update after spending a few hours at the local amusement park for an end-of-year school event didn’t exactly go to plan. I can say with confidence that I have officially reached the “Dad probably should think twice about going on that ride” age. What was supposed to be Monday’s update is now ready. We will simply shift the updates back a day this week.
My new audio podcast, AVALON, launches today. The first episode will likely be out by time you read this email.
Based on a few incoming member questions regarding AVALON and Above Avalon membership, it’s worth clarifying a few things. Please bear with me as odds are good other members may have similar questions. I want to make sure this information is seen.
AVALON is my all-new, paid audio podcast ($10/month or $100/year) available as a standalone subscription. This means someone who isn’t an Above Avalon member can subscribe just to AVALON for $10/month or $100/year.
AVALON, my first unscripted podcast, is very different from these daily updates (officially called the Above Avalon Daily newsletter and the cornerstone of Above Avalon membership). The two utilize dramatically different creation processes and consumption patterns.
Listening to AVALON as a member. For Above Avalon members who are interested in listening to AVALON, to avoid needing to keep track of two different subscriptions, the podcast can be bundled with your Above Avalon membership at a special rate (just +$6/month or +$60/year). This isn’t too different from Above Avalon members bundling an Inside Orchard subscription with their membership at a special rate (just +$5/month or +$50/year).
Using add-ons to customize your membership. From Day 1, Above Avalon memberships have been anchored by these written daily updates (1,800+ have been published to date). There is no change to that dynamic. Over the years, members have seen a growing number of ways to customize membership to suit different interests, workflows, and schedules.
This is accomplished by attaching add-ons to one’s membership:
Inside Orchard – my broader views on tech available via written essays and audio podcast (+$5/month or +$50/year – 50% off). Fill out this form to attach the add-on to your membership.
AVALON – a weekly, unscripted podcast about Apple product strategy and analysis – loosely modeled after Apple’s Monday morning meetings (+$6/month or +$60/year – 40% off). Fill out this form to attach the add-on to your membership.
Podcasts - listen to two podcasts (Above Avalon Daily + AVALON) +$10/month or $100/year. This is a huge increase in value-add found with the add-on, as the Above Avalon Daily podcast was previously $10/month or $100/year on its own. Fill out this form to attach the add-on to your membership.
Financial Models – access my earnings model and three installed base models (iPhone, iPad, and Apple Watch) +$850/year. If you have the Podcasts and Inside Orchard add-ons, you get a $150 discount. Fill out this form to attach the add-on to your membership.
In summary:
Above Avalon membership (access to the daily newsletter called Above Avalon Daily, the archive, and other benefits including email access)
Inside Orchard add-on (access to everything at InsideOrchard.com)
AVALON add-on (access to the all-new AVALON podcast)
Podcasts add-on (access to both the AVALON podcast and Above Avalon Daily podcast - the daily newsletter in audio form)
Financial Models add-on (access to four of my Apple financial models)
If you have questions, please shoot them my way. Also, if at any time you would like information about your membership and are unsure about the add-ons that you may or may not have, reach out - email works fine, although you can DM on Discord as well.
Let's jump into today's update with OpenAI.
OpenAI COO Talks Screenless Devices
Here’s the WSJ:
“OpenAI Chief Operating Officer Brad Lightcap said the AI revolution has ushered in an opportunity to create a new set of devices.
Lightcap, speaking at The Wall Street Journal’s Future of Everything event on Thursday, said that OpenAI is focused on building AI that is ‘truly personal.’
Right now, users access ChatGPT through web browsers and apps on a smartphone. OpenAI wants to build an ‘ambient computer layer’ that can detach people from always having to be looking at a screen, he said. ‘There’s a lot that we have to do to develop models to succeed in that environment.’
Lightcap said he has ‘no idea’ what device Chief Executive Sam Altman is working on with former Apple designer Jony Ive. The pair announced earlier this month that OpenAI is acquiring Ive’s company io in an all-equity deal that values it at $6.5 billion."
This 28-minute interview (available here via YouTube) provided a good summary of how OpenAI is thinking about business strategy. One reason the talk jumped out at me is Lightcap didn’t come across as trying to sell me something which is common in many AI-focused chats and talks.
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Takeaways From Apple’s New App Store Study, Apple's Ongoing Fight Against App Store Fraud, App Durability
Hello everyone. Instead of sending this update late last night, I decided to hold on to it until Friday morning.
Ahead of this year’s WWDC, Apple released a new study regarding App Store billings and sales. Earlier in the week, new data points regarding Apple’s efforts to protect developers and customers from fraud in the App Store were also released. We will talk about both topics in today’s update.
A quick update on where things stand with my new podcast, AVALON.
The first episode goes live on Tuesday. Instead of chasing sponsorships and ads, AVALON will be 100% supported by its listeners. A standalone subscription, not connected to Above Avalon membership, will be just $10 per month (or $100 per year). If you know someone who would be interested in the podcast, especially if they are new to Above Avalon, word of mouth is greatly appreciated. AVALON price discounts are available for Above Avalon members. If you have the Podcasts add-on, AVALON will be free. If you don’t have the Podcasts add-on, AVALON will be just $6 per month (or $60 per year) - you can use this form to sign up.
All members with the Podcasts add-on attached to their membership prior to Wednesday were sent a welcome email from “Neil Cybart (via Transistor)” on Thursday. To listen to AVALON, open that welcome email and select your preferred podcast player. One way of knowing that everything is up and running is you will see a short sneak peek episode appear in your podcast player. For members who recently filled out forms to either attach the Podcasts add-on to their membership (form available here) or subscribe to AVALON (form available here), those requests will continue to be fulfilled today (Friday) and tomorrow (Saturday). Thank you for your patience during this initial rush period.
With that, let’s jump into today’s update.
Takeaways From Apple’s New App Store Study
Yesterday, Apple released a new App Store study. Similar reports have been published over the years. Like the prior reports, this latest report was funded by Apple.
Two points that Apple wanted to draw attention to:
Most billings and sales facilitated by the App Store involve no commission being paid to Apple. Instead of this being a new disclosure or development, it’s a fact that continues to fly under the radar. Likely due to the news flow revolving around high-profile App Store courtroom battles, consensus likely assumes most developers pay Apple via in-app purchases (IAP) to have their apps available in the App Store. The courts and regulators have focused primarily on IAP (App Store “billings”) as large companies try their best to wrestle power away from Apple to earn more money – it’s always been about the money with these companies despite PR campaigns that say otherwise. The numbers suggest less than 10% of U.S. billings and sales facilitated by the App Store involve a commission being paid to Apple. The report defines billings as payments tied to app monetization (paid downloads, IAP etc.) while sales, a much larger total, refers to payments spent on buying goods and services.
U.S. developers saw earnings double over the last five years.
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Introducing AVALON, an all-new podcast about Apple from Neil Cybart
This is a fascinating time for Apple. The company is opening new chapters with spatial computing and personal intelligence. Looking ahead, the next 10 years will be incredibly intriguing. However, it doesn’t feel like it in the Apple community.
Many long-time voices in the space seem tired. This has led to podcasts filled with complaining more than anything else. Some podcasters have seemingly lost touch with their audiences. It’s time for fresh, down-to-earth voices. That is why I am starting a new podcast called AVALON. (Check out the website here.)
This is my first unscripted podcast. It's loosely modeled after Apple’s Monday morning meetings in which the senior executive team goes over the entire business.
Each week, the discussion will be anchored on Apple products. There will be plenty of product strategy and industry analysis talk as well as personal observations and perspective. We will also have time to talk about other topics and hear from AVALON listeners.
Join me on this new journey. The first episode will go live on Tuesday, June 3rd. New episodes will be released every Tuesday.
Instead of depending on sponsorships or ads which would make me chase listener growth, AVALON will be 100% supported by its listeners. For non-members, a subscription will be $10 per month or $100 per year. You can use the following payment forms below:
For Above Avalon members with the Podcasts add-on attached to their membership, the AVALON podcast will be free. This marks a significant expansion in value found with the Podcasts add-on, which will now provide access to two exclusive podcasts (Above Avalon Daily and AVALON). If you have the Podcasts add-on, you will receive an email from “Neil Cybart (via Transistor)” that will allow you add the AVALON podcast to your favorite podcast player. For those of you without the Podcasts add-on, you can attach the add-on to your membership by filling out the form available here.
Members without the Podcasts add-on receive a large 40% discount on AVALON (just $6 per month or $60 per year). The special pricing represents more value flowing to your underlying membership. Fill out the form available here to sign up for AVALON at $6 per month or $60 per year.
Check out a quick video recapping this announcement here (YouTube) or here(AboveAvalon.com)
- Neil
Apple Acquires RAC7 Gaming Studio, Meta to Open Stores to Sell Wearables, A Retail Wild Card
Happy Wednesday.
Thank you for the comments and sign-ups regarding my new podcast, AVALON. An unscripted podcast is something that has been on my mind for a very long time. It’s new territory for me, and I’m ready for the journey.
Given today’s launch and the backlog of online registration forms for the Podcasts add-on and AVALON, it will take a little bit of time to get everyone who either already has the Podcasts add-on or who recently filled out a registration form up and running with the new podcast. This is one reason for unveiling AVALON a few days prior to the first episode going live (Tuesday, June 3rd).
On to today's update.
Apple Acquires RAC7 Gaming Studio
Here’s Digital Trends:
“Apple has acquired RAC7, the two-person video game developer behind Apple Arcade hit Sneaky Sasquatch. This is the first time that Apple has acquired a video game studio in its history, but the company describes the move as a unique situation.
RAC7 is a two-person studio whose previous credits include indie titles Dark Echoand Splitter Critters. In 2019, the team released Sneaky Sasquatch as an Apple Arcade exclusive. The adventure game was a breakout hit among the service’s 71 launch titles, according to Apple, and it has received regular updates since launch. Now, the team will continue its partnership with Apple as an internal studio.
‘We love Sneaky Sasquatch and are excited that the 2-person RAC7 team has joined Apple to continue their work on it with us,’ an Apple spokesperson tells Digital Trends. ‘We will continue to deliver a great experience for Apple Arcade players with hundreds of games from many of the best game developers in the world.’”
According to Digital Trends, Apple signaled that this was a unique circumstance rather than a broader shift in gaming strategy. We shouldn't expect Apple to now go on a gaming studio shopping spree.
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Member Privileges and Benefits
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Above Avalon Support. Play an active role in supporting Above Avalon as an independent voice and resource.
Trump Goes After Tim Cook, Apple’s PR Win, What’s the Solution?
Hello everyone. We get back into the swings of things with iPhone production, India, and President Trump going after Tim Cook. Let’s jump right in.
Trump Goes After Tim Cook
Here’s the WSJ:
“President Trump fired new salvos in the global trade war on Friday, threatening a 50% tariff on imported goods from the European Union and new duties on iPhones and other smartphones made overseas.
Trump said the EU had been ‘very difficult to deal with’ on trade in a Friday morning social-media post. Less than a half hour earlier, he threatened Apple and its chief executive, Tim Cook, with a tariff of at least 25% on iPhones made overseas.
‘I have long ago informed Tim Cook of Apple that I expect their iPhone’s that will be sold in the United States of America will be manufactured and built in the United States, not India, or anyplace else,’ he wrote on Truth Social.
‘If that is not the case, a Tariff of at least 25% must be paid by Apple to the U.S.,’ the president wrote.
Later on Friday, in Oval Office comments, Trump said those tariffs will include ‘Samsung and anybody that makes that product, otherwise it wouldn’t be fair.’ Trump appeared to be referring to companies that manufacture smartphones outside of the U.S. He added that the tariffs would likely be imposed in late June.”
The development that likely led to this latest battle was news of Apple ramping iPhone production in India. For an administration that has been pushing a narrative involving firms embracing U.S. manufacturing, reports of Apple increasing its bet on India for iPhone production likely didn’t go over well.
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Above Avalon Support. Play an active role in supporting Above Avalon as an independent voice and resource.
OpenAI Buys Jony Ive's HW Startup, OpenAI’s First HW Product, Connecting the OpenAI HW Dots
Happy Thursday. We will dedicate a full update to the Jony Ive / OpenAI news. The update begins with a little bit of background on what Jony Ive has been up to since Apple. We will then talk about yesterday’s news, including what was quite the interesting announcement video put out by OpenAI, and what will likely be OpenAI’s first HW product.
Let’s jump in.
OpenAI Buys Jony Ive's HW Startup
Since leaving Apple in 2019, Jony has been running LoveFrom, a design consultancy he started with Marc Newson. LoveFrom, which poached a decent number of Apple employees, has a handful of high-profile clients including Airbnb and Ferrari. While the company has garnered some headlines here and there, the overall vibe has been very much a team of creatives quietly working behind the scenes on interesting projects and products.
In 2023, rumors began to circulate that Jony was working with OpenAI CEO Sam Altman on AI devices. The rumors were surprising, to put it mildly, given the hoopla surrounding OpenAI. Last year, there were reports of Jony and former Apple designers starting a new HW company dedicated to working on AI devices with OpenAI. The company was seeking $1B in funding.
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My Thoughts on Google I/O 2025
Hello everyone. Today’s update will be dedicated to discussing Google I/O. The company kicked off its annual developer conference yesterday. Let’s jump right in.
My Thoughts on Google I/O 2025
The overall message from Google’s I/O keynote (available to watch here) was that the world is adopting AI, and Gemini is Google’s primary AI vessel. Similar to last year, the company included a gag slide at the end of its nearly two-hour presentation that pointed out the number of times certain words were mentioned on stage. Gemini (95) beat AI (92). At last year’s I/O keynote, AI was said 121 times.
In pushing the “AI research is turning into reality” theme, Google gave quick updates regarding three Google DeepMind examples:
Project Starline. Rebranded as Google Beam, a “AI-first video communication platform” that turns 2D video into a 3D video stream. Google will partner with HW on the required HW for what looks to be enterprise solutions.
Project Astra. All about building a universal AI assistant that understands the world around us thanks to mobile (and eventually wearable) cameras.
Project Mariner. A web-browsing AI agent that acts on users’ behalf. Available to Google AI Ultra subscribers ($250/month).
In terms of broader product-focused sections or themes to the keynote, there were three (Google held a separate event for Android a few days earlier):
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Meta 1Q25 Earnings, Zuckerberg’s Five AI Opportunities, Meta is CoComelon for Adults
Hello everyone. We will use today’s update to circle back to Meta’s latest earnings report. The company reported earnings a few weeks ago. While Meta is the most direct competitor to Apple among Big Tech companies, there are some signs of the companies’ product paths, which have been getting closer to each other, potentially staying apart.
Meta 1Q25 Earnings
The big picture was very much intact with Meta’s 1Q25 earnings. Digital ads strength is more than offsetting atrocious losses in Reality Labs.
With 1Q25 revenue up 16% and costs up 9%, Meta’s operating margin grew to 41% from 38%. As previously disclosed, the company benefited from an “extension of server useful lives.” Said another way, depreciation wasn’t as bad as it otherwise would have been. Ad impressions were up 5% (primarily Asia-Pacific) while average price per ad was up 10%.
One additional point regarding expenses: Meta’s general and administrative expense fell by a whopping 34% year-over-year – a $1.2B drop – due to lower legal costs. That helped to offset more than half of the year-over-year increase in R&D (+22%).
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The WSJ’s Sketchy iPhone Pricing Article, Does Apple Need Higher iPhone Pricing?, Does iPhone 16e Provide Pricing Clues?
Happy Monday. We will jump into today's update with a recent story from the WSJ regarding iPhone pricing. Let's jump right in.
The WSJ’s Sketchy iPhone Pricing Article
Here’s the WSJ:
“Apple is weighing price increases for its fall iPhone lineup, a step it is seeking to couple with new features and design changes, according to people familiar with the matter.
The company is determined to avoid any scenario in which it appears to attribute price increases to U.S. tariffs on goods from China, where most Apple devices are assembled, the people said.
The U.S. and China agreed Monday to suspend most of the tariffs they had imposed on each other in a tit-for-tat trade war. But a 20% tariff that President Trump imposed early in his second term on Chinese goods, citing what he said was Beijing’s role in the fentanyl trade, remains in place and covers smartphones.
Trump had exempted smartphones and some other electronics products from a separate ‘reciprocal’ tariff on Chinese goods, which will temporarily fall to 10% from 125% under Monday’s trade deal.
New iPhones set to be released in the fall include some design and format changes, including an ultrathin design, The Wall Street Journal has reported.”
Nothing found in this article makes me think the WSJ knows what Apple may or may not do with this year’s new flagship iPhones. The WSJ’s “sources” in the supply chain are not going to know Apple’s iPhone pricing strategy. Apple pricing rumors should be discounted in general as Apple is able to keep pricing information under wraps.
For the past few years, price increases have been rumored ahead of Apple’s busy fall release cycle.
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Apple Unveils CarPlay Ultra, CarPlay Ultra vs. CarPlay, Revisiting CarPlay Strategy
Hello everyone. This may be the first time two updates were published on the same day. For a decent portion of you, it’s already Friday. Accordingly, let’s date this update May 16th.
With WWDC a few weeks away, Apple is sticking with the pattern used the past few years in announcing a few new features ahead of its developer conference. Today’s update will be dedicated to discussing CarPlay Ultra.
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Become an Above Avalon member and receive the following privileges and benefits:
Exclusive Analysis. Receive the Above Avalon Daily newsletter, widely-recognized as the leading daily newsletter dedicated to Apple. Now in its tenth year.
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Above Avalon Support. Play an active role in supporting Above Avalon as an independent voice and resource.
Notes From Apple 2Q25 10-Q, Apple Buyback Tidbits, Forecasting Apple’s Share Buyback Pace
Hello everyone. Although we concluded our Apple 2Q25 earnings review a few days ago, we still needed to quickly go over Apple’s 2Q25 10-Q filing. We will kick off today’s update with that filing. Our attention will then shift to Apple’s share buyback program.
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Member Privileges and Benefits
Become an Above Avalon member and receive the following privileges and benefits:
Exclusive Analysis. Receive the Above Avalon Daily newsletter, widely-recognized as the leading daily newsletter dedicated to Apple. Now in its tenth year.
Archive Access. Access previous newsletters sent to members.
Member Forum Access. Access all channels in the Above Avalon forum in Discord.
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Above Avalon Support. Play an active role in supporting Above Avalon as an independent voice and resource.
Apple Requests App Store Stay Motion, The Four-Prong Test, Apple’s Odds of Success
Hello everyone. Happy Tuesday.
Last week, Apple filed an emergency motion for a partial stay pending its appeal of the App Store anti-steering injunction ruling. In layman’s terms, Apple is asking the appeals court to temporarily halt some of Judge Yvonne Gonzalez Rogers' App Store directives while Apple’s appeal works through the system. While the appeal will take at least six months to play out, this emergency motion should be addressed by the court this month.
Taking a step back from this motion, the broader App Store injunction ruling and the ongoing Google search antitrust case are weighing on Apple in terms of Wall Street (concerns regarding financial impact) and Main Street (concerns regarding customer experience impact). You can feel the angst in the air. Apple’s stay motion, if granted, will reduce some of that angst.
One quick note before jumping into today's update: I launched Above Avalon membership 10 years today. May 13th, 2015. Over the past 10 years, ~1,900 daily updates have been published. Today's daily podcast episode was the 850th episode. A big thank you to all members, especially those who have been with me since Day 1.
Let’s jump in.
Become a member to continue reading today’s update. Already a member? Read the full update here.
An audio version of this update is available to members who have the podcast add-on attached to their membership.
Member Privileges and Benefits
Become an Above Avalon member and receive the following privileges and benefits:
Exclusive Analysis. Receive the Above Avalon Daily newsletter, widely-recognized as the leading daily newsletter dedicated to Apple. Now in its tenth year.
Archive Access. Access previous newsletters sent to members.
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Eddy Cue Talks up AI Search, Google’s Response to Cue’s Testimony, Future of Search
Happy Monday. Yet again, we begin a new week with a lot of news.
Late last week, Apple filed its motion to stay related to the anti-steering rule. The filing is on my “will discuss” list for this week.
There is news regarding the U.S. and China reaching some sort of trade de-escalation in which U.S. tariffs on goods from China have been reduced from 145% to 30% for three months.
The WSJ is out with a report saying Apple is thinking about raising prices for new iPhones that will be unveiled later this year.
One quick note regarding Apple earnings: Our 2Q25 earnings review is pretty much complete. There may be time this week to quickly circle back to the 10-Q and a few buyback observations.
Today’s update will be focused on Eddy Cue’s testimony at the Google trial making waves. The Court is hearing testimony as part of the remedies phase for Google’s antitrust trial. Let’s jump right in.
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Reading Between the Lines of Apple’s 2Q25 Earnings Q&A With Analysts
Hello everyone. Today’s update will continue our Apple earnings review.
Here’s a recap of where things stand:
Last Friday: Overview / Apple’s results vs. my expectations.
Yesterday: Three sub-themes / charts arising from 2Q25 earnings.
Today: Reviewing the Q&A from Apple’s earnings call.
After recapping each question-and-answer exchange that occurred on the call between Apple and sell-side analysts, we will go over my response to the exchange. Let’s go beyond what was talked about on the call with the 14th installment of reading between the lines of Apple's earnings Q&A with analysts.
NOTE: The following earnings call questions (“Q (Sell-Side Firm)”) and answers (“Cook” or “Parekh”) have been cut, summarized, paraphrased, and rearranged for clarity. To read the full question and answer exchanges, Insider Monkey offers a written transcript here.
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Become an Above Avalon member and receive the following privileges and benefits:
Exclusive Analysis. Receive the Above Avalon Daily newsletter, widely-recognized as the leading daily newsletter dedicated to Apple. Now in its tenth year.
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Above Avalon Support. Play an active role in supporting Above Avalon as an independent voice and resource.