Apple Raises Apple TV+ Monthly Pricing by 30%, More Guerrilla Marketing Surfaces for Severance, Apple Reportedly Wants Out of MLB
Hello everyone. Welcome to a new week.
We will jump into things by venturing into Apple TV+ land.
Apple Raises Apple TV+ Monthly Pricing by 30%
In a press statement issued last Thursday, here’s Apple:
“The monthly subscription price for Apple TV+ will increase in the U.S. and select international markets for new subscribers beginning today, August 21. In the U.S., the monthly price is now $12.99 (up from $9.99). Existing subscribers will see the change 30 days after their next renewal date. The annual subscription price remains unchanged, as does pricing for Apple One, which is the easiest way to enjoy all of Apple’s subscription services in one plan at the best value.
Since its launch, Apple TV+ has expanded its deep library of hundreds of exclusive Apple Originals, with thousands of hours of premium programming across genres and brand new releases weekly — all ad-free.”
The following exhibit shows stated Apple TV+ monthly pricing since the 2019 launch including this newest 30% increase. The two prior increases were 40% (2022) and 43% (2023).
This latest price increase is different from the others as Apple did not alter Apple TV+ pricing for annual and Apple One subscriptions.
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Google Has No Taste, Google's Apple Envy, Pixel Poses No Threat to iPhone
Hello everyone.
Today’s update will be dedicated to discussing Google’s “Made By Google 2025” product event held this past Wednesday in NYC. Google uses the event to unveil new hardware ahead of the busy fall season. (Starting in 2023, Google has held the event in August to get ahead of Apple’s big event in September.)
Let’s jump right in.
Google Has No Taste
Before we talk about the products that were unveiled at Made by Google 2025, we need to spend time discussing the event itself.
Wednesday’s Google event easily ranked as one of most ridiculous product unveilings held in the consumer gadget space in the past decade and possibly even longer. Watching it would be a waste of your time.
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U.K. Backtracks on Apple Back Door Request, EU to Accept Apple’s Revised DMA Approach, U.S. Anti-Steering Injunction Ruling Looks Even More Absurd
Hello everyone. We will begin to attack our “to discuss” list with two stories involving Apple in Europe. In what feels like an outlier these days, Apple actually managed to secure some political wins.
Let’s jump in to discuss.
U.K. Backtracks on Apple Back Door Request
While services like Messages and FaceTime are end-to-end encrypted, such protection historically was not maintained when data was stored in the cloud. For example, iCloud backups allowed such data to be accessed via U.S. search warrants. In 2022, Apple unveiled Advanced Data Protection (ADP), an opt-in feature, which brought end-to-end encryption to additional Apple ecosystem features including iCloud backups. iCloud Mail, Contacts, and Calendars are not part of ADP.
ADP likely played a role in the U.K. wanting Apple to build a backdoor so that the government can access content from any Apple user, regardless of location. Apple pulled ADP in the U.K. in what was a calculated move. U.S. lawmakers and government officials raised concerns.
Six months later, the U.K. officials changed their mind.
Here’s Reuters:
“Britain has dropped its demand for the iPhone maker Apple to provide a ‘backdoor’ that would have enabled access to the protected encrypted data of American citizens, U.S. Director of National Intelligence Tulsi Gabbard said.
Gabbard issued the statement on X on Monday in the U.S., saying she had worked for months with Britain, along with President Donald Trump and Vice President JD Vance, to arrive at a deal…
A spokesperson for the British government said on Tuesday that while they would not comment on any agreement, Britain had long worked with the U.S. to tackle security threats while seeking to protect the privacy of citizens in both countries.
We will always take all actions necessary at the domestic level to keep UK citizens safe,’ the spokesperson added.”
This is a big win for Apple and its customers around the world.
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Apple and Tech Musings From My Vacation
Hello everyone. It feels good to be back after a mini vacation and some time away. Even though last week was relatively quiet on the news front, my “possible discussion” list for these updates now sits at 20 topics.
The plan of attack is to get back into the swing of things gradually with some musings and observations that came to me last week while away.
Let’s jump in.
Apple and Tech Musings From My Vacation
Each year, taking some time off during the summer has allowed me to get fresh perspective when it comes to tech and gadget usage. For example, a few years back going a week without anything besides touch-based devices made my eventual return to macOS and a mouse/cursor feel odd almost as if my brain needed to be rewired. The experience offered a fresh feel for differences in intuitiveness. In addition to different device usage trends, vacations will often bring about new needs and use cases for certain apps and services.
For this year’s “vacation tech musings,” four topics jumped out at me:
Apple Intelligence features in Photos (iPhone).
Downsides found with unlimited streaming content.
Meta’s grip on young adults.
Apple Watch’s continued power.
Apple Intelligence features in Photos (iPhone). Apple positions three features within Photos as powered by Apple Intelligence:
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Thoughts on Apple’s Gross Margins, Gross Profit, Capex, Capital Management, and 10-Q Filing
Hello everyone.
Please bear with me as there are a number of housekeeping items.
Crazy Week. What a week. A power surge caused by thunderstorms led to a series of repairs at Above Avalon HQ and a subsequent change in the daily updates release schedule. Everything is now back to normal. On the flip side, we get a rare weekend edition of the Above Avalon Daily.
Today’s Update. Going through possible discussion topics for today’s update, there were a handful of remaining financial subjects that deserved a deeper look. Apple’s 3Q25 10-Q filing was also an outstanding discussion topic. Accordingly, today’s update will be a sort of financial catch basin covering various topics. After today, Apple earnings will be firmly in the rearview mirror.
Schedule. One news item that may come at any point is the prescribed remedies regarding Google’s antitrust trial. We will see how things go and if an emergency update is needed. For a recap of where my thoughts are on the topic, check out the updates from August 12th, 2024, August 13th, 2024, and November 25th. Questions surrounding the Google Search contract may constitute the biggest unknown currently facing Apple. (Consensus is always unsure of Apple’s future product strategy, so that doesn’t count.)
Above Avalon Week-in-Review. A recap of analysis and perspective published elsewhere in the Above Avalon ecosystem. You can use the blue links to get more information on the podcast episodes or essay.
AVALON Podcast (my unscripted weekly podcast about Apple)
Episode 9: Liquid Glass: Half Empty of Half Full? My impressions using Liquid Glass and other iOS 26 features.
Episode 10: It’s Tough Making Money From Hardware. An inside look at how companies try to influence analyst expectations ahead of earnings.
Inside Orchard (Above Avalon’s sibling site covering my broader thoughts on tech via essays and a podcast)
Elon Musk Should Step Down as Tesla CEO. I lay out the case for why it’s time for Musk to officially handoff the Tesla reigns to someone else.
We will now turn to today’s update.
Thoughts on Apple’s Gross Margins Percentages, Gross Profit, Capex, Capital Management, and 10-Q Filing
Gross Margin Percentages
Based on Apple’s 3Q25 earnings and 4Q25 guidance, Apple’s gross margin will likely finish FY25 close to 46.8%. This would be up from 46.2% in FY24, continuing what has been a remarkable streak of gross margin improvement. Gross margins are now trending at a 13-year high for Apple despite some tariff impact and slight FX headwind in the beginning of the year. Five years ago, gross margin was way back at 38%.
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Tim Cook's Oval Office Event, Apple Receives Tariff Exemptions, Apple’s Additional $100B U.S. Commitment
Hello everyone. There will be another regular update tomorrow (Friday), so be on the lookout for that.
Let’s jump right into today’s email.
Tim Cook's Oval Office Event
Earlier in the week, President Trump appeared on CNBC to talk trade and tariffs. One of the market-moving news items was Trump announcing new tariffs on semiconductors would be announced within the week. These tariffs – Section 232 tariffs – would cover consumer gadgets currently exempt from IEEPA (International Emergency Economic Powers Act) tariffs. The unknown found with Section 232 tariffs was one of a few major headwinds weighing on Apple for the past few months.
Yesterday morning, news began to circulate that Trump would be making an announcement in the Oval Office regarding Apple and a new U.S. investment commitment. Shortly thereafter, there were reports that Tim Cook would be attending the event. Cook’s presence would mark the first time he has appeared with publicly with Trump during his second presidential term.
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Reading Between the Lines of Apple’s 3Q25 Earnings Q&A With Analysts
Happy Wednesday everyone. Given some repairs that are taking place at Above Avalon HQ, the release timing for everything this week is going to be a bit different. There are three remaining daily updates this week. Given what may be some breaking news on the politics/tariffs front, the discussion topics for the remaining two updates may be adjusted at the last minute.
For today’s update, we will conclude our Apple 3Q25 earnings review with the latest installment of Reading Between the Lines. Apple’s 3Q25 earnings call with analysts touched upon most of the interesting discussion topics worth going over from earnings. There are a few remaining items like margins and capital management that could use more discussion. We will see if those topics can be fit into the schedule later this week.
Reading Between the Lines of Apple’s 3Q25 Earnings Q&A With Analysts
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 15th 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, The Motely Fool offers a written transcript here.
iPhone
Q (TD Cowen): How was iPhone channel inventory?
Cook: iPhone channel inventory fell throughout the quarter with inventory ending toward the low end of our targeted range.
My response: There was no sign of Apple stuffing the channel with excess iPhone inventory. Such excess inventory would have had the effect of artificially boosting 3Q25 iPhone revenue.
Q (UBS): What drove iPhone strength in 3Q25?
Parekh: iPhone 16 family strength vs. the iPhone 15 family last year. We also recently introduced the iPhone 16e.
My response: The takeaway is that
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iPhone, Mac, and Apple Watch Unit Sales Data
Hello everyone. We will continue our Apple 3Q25 earnings review. Leveraging the latest Apple financial data, we take a closer look at iPhone, Apple Watch, and Mac unit sales. In some ways, the three product categories are each telling a different story. Let's discuss.
iPhone, Mac, and Apple Watch Unit Sales Data
After spending more time with Apple’s 3Q25 earnings and my Apple earnings model, the most intriguing takeaways from Apple’s quarter were found with something that the company doesn’t actually disclose themselves: HW unit sales. Specifically, iPhone, Mac, and Apple Watch unit sales. Apple stopped disclosing unit sales data in 2018. My earnings model derives unit sales data from Apple HW revenue disclosures, management commentary, and my installed base models that track upgrading behavior.
We will circle back to talk more about the latest Apple margin trends tomorrow when going over Apple's 3Q25 earnings call with analysts. While there are fresh headwinds for margins in terms of tariffs and greater investments in AI, FX has flipped to being neutral to even slightly positive. In addition, Apple’s overall gross profit found with HW is moving higher despite margin percentages coming down a tad.
iPhone Unit Sales
Based on headlines and articles in recent years, one may think iPhone sales peaked a while ago and have been flat or even trending down since. This would be a misread of the situation.
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Initial Thoughts on Apple’s Strong 3Q25 Earnings
Hello everyone. Welcome to a special Friday edition of Above Avalon Daily. Apple reported 3Q25 earnings yesterday (Thursday). The results can be viewed here. Today's update will go over my initial thoughts on the release and earnings call. We will continue our discussion next week.
Have a great weekend.
Let's jump right into today's update.
Initial Thoughts on Apple’s Strong 3Q25 Earnings
Yesterday, Apple reported its strongest quarterly results in more than three years. Overall 3Q25 revenue was up 10%. We need to go back to 1Q22 for the last time Apple reported double-digit revenue growth (+11.2%). Results for iPhone and Mac were legitimately good. iPhone revenue was up 13% (strongest quarterly revenue growth since 4Q21) while Mac revenue was up 15% continuing what has been an upturn in the Mac business.
While the iPhone and Mac were the two Apple product categories that stood to see the greatest impact from a pull forward in demand related to tariff fears, Apple said such pull forward was not the primary driver for the strong quarterly performance. For iPhone, approximately 20% of 3Q25 revenue growth was attributed to pull forward. Overall, about 10% of Apple’s 3Q25 revenue growth was related to pull forward.
Apple also said iPhone channel inventory
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My Apple 3Q25 Earnings Estimates, Above Avalon Expectation Meters
Happy Wednesday.
A few quick housekeeping items.
Daily Updates Schedule. With Apple releasing earnings tomorrow (Thursday) after market close, the next update will go out on Friday.
Updated / Revised Financial Models. My updated Apple earnings model (works with Excel and Numbers) is now available to members with the Financial Models add-on attached to their Above Avalon Daily subscription. For those of you with the add-on, log into the Above Avalon payer portal (here). Once signed in, go to the "Digital Package" tab which will bring you to your personalized page where the model can be downloaded. In addition to the updated earnings model being available, my iPhone, iPad, and Apple Watch installed base models have also been updated ahead of Apple earnings. If you are interested in accessing these models, learn more about the Financial Models add-on by going to this page.
Let’s jump in.
My Apple 3Q25 Earnings Estimates
Here are my expectations for Apple’s key 3Q25 metrics:
Revenue: $89.9B (consensus is at $89.2B).
EPS: $1.47 (consensus is at $1.43).
iPhone revenue: $40.9B.
Services:
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Thoughts Heading Into Apple’s 3Q25 Earnings Release
Hello everyone. Apple reports earnings on Thursday. For today's update, we will begin to prepare for the earnings release.
Thoughts Heading Into Apple’s 3Q25 Earnings Release
As we will discuss in greater detail tomorrow, Apple’s 3Q25 results should be relatively fine. Revenue growth will likely be close to 2Q25 levels while margins may get dinged a little bit by tariffs. And yet, the numbers themselves probably won’t matter a whole lot. Instead, Apple finds itself stuck in mud on Wall Street. A growing list of headwinds have contributed to Apple shares experiencing some of their worst underperformance relative to peers and the market in recent memory.
While every other Big Tech company has moved notably higher from the tariff-induced lows of early April, Apple has barely participated.
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Alphabet 2Q25: By the Numbers, Alphabet Earnings Call Highlights, Overall Alphabet Takeaways
Hello everyone. Welcome to a new week. Apple will report earnings on Thursday. We will begin our earnings review tomorrow while also covering other news items and events. For today's update, we will continue our 2Q25 tech earnings reviews by going over Alphabet's earnings. Alphabet continues to be more of an Apple partner than competitor although the line between the two is blurred at times.
Let's jump in.
Alphabet 2Q25: By the Numbers
Overall, Alphabet’s 2Q25 revenue growth story was very much intact. Mid-teens growth with a little bit of FX headwind is not shabby at all. There may be a little bit of disappointment that margins aren’t improving alongside that double-digit revenue growth. Such concerns may be sticking around too as Alphabet’s depreciation expense continues to rise (tied to ballooning capex). We talked about that trend earlier in the month in the July 9th update available here.
Alphabet 2Q25 key numbers:
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Apple Unveils AppleCare One, Revisiting Apple Hardware as a Service, Crunching Some AppleCare One Numbers, ChatGPT Agent Follow-Up
Hello everyone. This update ended up taking a lot longer than expected to write. As you will see, the discussion goes over quite a few new financial / business assumptions involving AppleCare+ that needed some time to breathe in my head before publishing.
Given the lack of an update yesterday, today’s update will also be longer as we go into more in-depth on one story that originally was going to be published on Thursday.
Above Avalon Week-In-Review. A recap of analysis published elsewhere in the Above Avalon ecosystem this week.
The AVALON Podcast. Episode 8: “The Art of the iPhone Fold,” was dedicated to discussing foldables. After going over some smartphone history, we discuss how the smartphone operating environment is changing, growing rumors of a foldable iPhone and ultra thin iPhone, and how the two trends could be related. The discussion also revisited the iPad mini vs. phablet dilemma that Apple faced in the 2010s and lessons learned from that era that can be applicable to foldables. The episode included other discussion topics including Give Me A Break (one ridiculous item from this week) and Tell Me More (something that caught my attention this week). AVALON is a weekly audio podcast loosely modeled after Apple's Monday morning meetings. Bundle the podcast with this daily newsletter and receive 40% off AVALON pricing. To bundle the podcast with this newsletter, fill out out this form. The Podcasts add-on, which includes access to both AVALON and these updates in audio form, can also be bundled with this newsletter here.
Inside Orchard. “Ten Uncomfortable Truths in Tech.” There is A LOT of movement and change in tech. The essay includes ten observations on what's unfolding. Topics range from Elon Musk and Ray-Ban Meta glasses to the Mac and Robinhood. To bundle Inside Orchard with this newsletter, fill out this form.
Let's jump into today's update.
Apple Unveils AppleCare One
Relying on the same branding as Apple One for bundling various Apple subscriptions into one large subscription, Apple is bringing bundling to AppleCare+ with AppleCare One.
In a press release issued on Tuesday, here’s Apple:
“Apple today unveiled AppleCare One, a new way for customers to cover multiple Apple products with one simple plan. For just $19.99 per month, customers can protect up to three products in one plan, with the option to add more at any time for $5.99 per month for each device. With AppleCare One, customers receive one-stop service and support from Apple experts across all of the Apple products in their plan for simple, affordable peace of mind. Starting tomorrow, customers in the U.S. can sign up for AppleCare One directly on their iPhone, iPad, or Mac, or by visiting their nearest Apple Store.”
Some early reaction online to this unveiling went along the lines of: It was about time that Apple offering something like this. AppleCare+ became available as a monthly subscription in 2019.
While the comment may have been said in jest, there is truth found in the broader idea that Apple is under, not over, monetizing its installed base. Instead of milking users with subpar and inferior products and services, the key is to sell offerings that improve the user experience found with being in the Apple ecosystem. This AppleCare One bundle offering would seem to fit that description as an increasing number of Apple customers have more than two Apple devices.
Another common reaction online to this news has been
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ChatGPT Agent Doesn’t Cut It
Hello everyone. Happy Tuesday.
Today’s update may make some people deep in AI mania a little bit uncomfortable as it has to do with signs of trouble on the horizon. The latest example is found with OpenAI and AI agents. Let’s discuss.
ChatGPT Agent Doesn’t Cut It
Last week, OpenAI unveiled a general purpose AI agent.
Here’s TechCrunch:
“OpenAI is launching a new general purpose AI agent in ChatGPT, which the company says can complete a wide variety of computer-based tasks on behalf of users. OpenAI says the agent can automatically navigate a user’s calendar, generate editable presentations and slideshows, and run code.
The tool, called ChatGPT agent, combines several capabilities from OpenAI’s previous agentic tools, including Operator’s ability to click around on websites, as well as Deep Research’s ability to synthesize information from dozens of websites into a concise research report. OpenAI says users will be able to interact with the agent simply by prompting ChatGPT in natural language.
ChatGPT agent is rolling out on Thursday to subscribers to OpenAI’s Pro, Plus, and Team plans…
The launch of ChatGPT agent represents OpenAI’s boldest attempt yet to turn ChatGPT into an agentic product that can take actions and offload tasks for users, rather than just answering questions. In recent years, Silicon Valley companies including OpenAI, Google, and Perplexity have unveiled dozens of AI agents that have promised to do just that. However, these early version AI agents have proven to struggle with complex tasks, and they seem less compelling as products than the ultimate vision tech executives pitch around AI agents."
OpenAI told The Verge that agent is a result of the Operator and Deep Research teams being combined to produce a team of approximately two to three dozen people.
The basic idea on display here isn’t exactly new. Every prior attempt to figure out agents has led to dead ends, forgotten promises, and an overall yawn.
Not to bury the lede: This agent unveiling and launch was not good enough.
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Netflix 2Q25: By the Numbers, Netflix Earnings Call Highlights, Overall Netflix Takeaways
Happy Monday. Tech 2Q25 earnings season has arrived. Netflix reported last Thursday. We have a few earnings releases this week. Apple reports next week.
Given the influx of new Above Avalon Daily subscribers since the AVALON podcast launched (welcome!), it’s worth quickly going over my philosophy when it comes to covering earnings in these updates.
There is value found in staying abreast on the latest trends and developments in industries that Apple either currently plays in or may play in. The idea isn't to simply note industry norms and best practices but rather gauge potential openings and opportunities for the company.
We will kick off our earnings reviews with Netflix which offers a look at the paid streaming market. While not the largest video streamer (that award goes to YouTube), Netflix provides one of the purer looks at paid streaming.
Netflix 2Q25: By the Numbers
Netflix has longed wanted Wall Street to look at revenue (for gauging growth) and margins (for gauging profitability). Based on those two metrics, the Netflix story was very much intact in 2Q25 (April to June).
The company is growing its membership (helps revenue), pushing sizable price increases (helps revenue as long as churn remains measured), all while being more rational on the content spending versus the past (helps margins).
Revenue: $11.1B (+15.9% from 2Q24). Guidance for the current quarter (3Q25) points to a slight acceleration in revenue growth to 17.3%. Management cited new members, price increases, and increased ad revenue as growth drivers.
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