Observations Attending Apple’s “Awe Dropping” Event, Who Is the iPhone Air For?, Apple Wearables Momentum
Hello everyone. In Wednesday’s update, we went over the major themes and takeaways from Apple’s product event.
iPhone Air is the most noteworthy iPhone redesign since at least iPhone X (2017).
Hardware design efficiency (with the goal of improving experiences / how devices are used).
Battery life optimization (via HW innovation & custom silicon).
Apple is ready to push new iPhone usage behaviors (iPhone as a fashion accessory / elevating the front-facing camera as a key differentiator from wearable cameras).
In going through my notes from this week, there were a handful of topics that deserved more attention and explanation than just a quick mention. Those discussion topics will comprise today’s (long) update. The updates originally meant for yesterday (Thursday) and today (Friday) have been combined into today’s update.
On Monday, we will go over my full notes from the week.
Observations Attending Apple’s “Awe Dropping” Event
This week’s event marked ten years since attending my first Apple event at Bill Graham Civic Auditorium in San Francisco. Over the years, there has been evolution in Apple’s product events. However, this week’s event seemed to contain more changes than usual.
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Apple’s “Awe Dropping” Event Review: Major Takeaways and Themes
Happy Wednesday. Today’s update includes the first part of my Apple event review. Apple’s pretaped presentation can be viewed here. The discussion will flow into tomorrow’s update. Let’s jump right in.
Apple’s “Awe Dropping” Event Review: Major Takeaways and Themes
iPhone Air
The iPhone Air is the most noteworthy iPhone redesign since the iPhone X in 2017. It’s tough putting the two redesigns head-to-head though as the iPhone X also included a significant change to how we engage with an iPhone (Touch ID -> Face ID as the home button was removed).
iPhone Air
After spending some time with the iPhone Air, the device lives up to the hype. There is a certain natural feeling found with the iPhone Air, as in you tend to gravitate to a thin device. Even after just a few minutes with iPhone Air, the other flagship iPhones feel shockingly thick. Our minds can play tricks on us. This exercise will be easily replicated in Apple stores when the iPhone Air is demoed next to the other iPhone 17 flagships.
Many people may associate an ultra-thin gadget with smallness. However, one of my first reactions using iPhone Air was that
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Some Thoughts Ahead of Apple’s Event, Apple Facing Improving Device Upgrade Environment
Hello everyone.
Apple is holding its product event next Tuesday at Apple Park. Accordingly, next week’s update schedule needs to be adjusted. There will be updates on Wednesday, Thursday, and Friday. At this time, my expectation is that all three updates next week will be dedicated to reviewing Apple’s event, but we can revisit that plan next week.
Today’s discussion will focus on a few additional topics that are on my mind ahead of Apple’s event.
Some Thoughts Ahead of Apple’s Event
Expectations are on the rise ahead of Apple’s “Awe dropping” event.
While there is a surprisingly high level of awareness among the public that new iPhones come out in the fall, it certainly feels like attention surrounding the iPhone is elevated. Some of this could be due to more iPhone users being in a position to upgrade. Another factor could be that some of these iPhone rumors involving significant design changes is getting through to people.
All signs point to Apple unveiling an all-new ultra-thin iPhone next week. The new model, which would be positioned somewhere between the base flagship iPhone and the pro models will likely grab the most buzz and press attention.
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Google’s Search Remedies Verdict, A Big Win for Apple, What Was Wall Street Expecting?
Hello everyone. Today’s update will be dedicated to discussing the U.S. v. Google search remedies verdict. Let’s jump right in.
Google’s Search Remedies Verdict
Overall, this verdict was a major win for Google. The Court didn’t even take a middle-of-the-road path with a judgement tailored in such a way so that both sides could claim themselves as winners.
Google does not need to divest Chrome / Android.
Google can continue to pay for default (search) placement.
Based on Google’s response to the verdict, they will continue with their appeal of the initial antitrust ruling. As we will discuss shortly, that stance makes sense. If given the choice, Google would not want to follow a few of the remedies that the Court ruled on. However, looking at the Court’s ruling in its entirety, this verdict represents a huge sigh of relief for Google.
AI mania played a major role in how the Court’s remedies were crafted.
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The Competitive Landscape Favors the iPhone, More on Elon Musk Suing Apple
Hello everyone. The highly anticipated remedies verdict in U.S. v. Google (available here) was released a few hours ago. Based on a quick look over the ruling, things look pretty good for Apple (and Google for that matter). We will dedicate tomorrow’s update to the topic.
For today’s and Thursday’s updates we will focus on a few topics that are on my mind ahead of Apple’s big event next week.
Let’s jump right in.
The Competitive Landscape Favors the iPhone
A week from today, Apple will host its largest event of the year when it comes to generating buzz and attention. WWDC is the largest event when thinking of number of Apple Park guests and overall operation (there’s many moving parts). And one can certainly argue new software is vitally important for the Apple ecosystem. However, the flagship iPhone event in September is able generate more press than any other Apple event. It’s a truly global affair as well. The iPhone is Apple’s best tool for grabbing new users around the world.
From a hardware perspective, attempts to somehow displace iPhone from its perch have not been successful. We can point to AI hardware startups underestimating consumers’ love for iPhone. Meanwhile, Apple peers are struggling to recreate the Apple playbook of vertical integration and ecosystem cohesion.
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Meta 2Q25 Earnings, Meta Durability, Thoughts on AI Researcher Poaching
Hello everyone. We have gotten through about half of my “to do” topics that existed at the start of last week. The other half of the list included various 2Q25 earnings reports from relevant companies. For today, we will focus on Meta. The company reported earnings back when Apple reported earnings. Starting off with Meta’s results, there will be a natural lead-in to then talk about a hot topic at least on social media regarding AI researcher poaching.
For this week’s Above Avalon Review – a quick look at what was published elsewhere in the Above Avalon ecosystem this past week - we have three items:
AVALON Podcast. This week’s episode, “No One Got Fired for Hiring Jimmy Fallon,” covered Google’s Pixel event in NYC last week, why Google doesn’t have taste, and the reasons for Google ending its first-party hardware endeavor. There were a few additional non-Google topics that rounded out the episode.
Last week’s AVALON podcast episode, "Flying Under the Radar," went over my thoughts on how Apple is officially flying under the radar and how the next 12 to 18 months will demonstrate this.
Inside Orchard. The newest essay, “Content’s Long Tail Is Being Weaponized,” was focused on how algorithm-powered content feeds are causing us to engage less with content's long tail which historically has been where much of our imagination is nurtured. This is leading to structural decline in content mediums ranging from music and long-form video to books and even blogs.
Let’s jump into today’s update.
Meta 2Q25 Earnings
Back on July 30th, Meta reported the strongest CY2Q25 revenue growth out of Big Tech (AAPL, MSFT, GOOG, META, AMZN). Revenue of $47.5B (up 22%) came in $2B above management’s guidance in what looked to be some quarterly sandbagging. This is when management teams provide quarterly guidance that it knows it has very good odds of beating. At the same time, it looks like some Wall Street analysts are not adjusting their estimates enough to reflect the sandbagging, resulting in quarterly beats to consensus. For what it’s worth, Meta executives claimed they were a bit cautious with 2Q25 revenue guidance given "macroeconomic uncertainty” as some Asia-based online commerce advertisers “had pulled back on their U.S. spend” in the beginning of the quarter.
At a basic level, there are two factors coming together to give Meta very strong core business results:
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Elon Musk Sues Apple, Apple Eyeing JPMorgan Chase for Apple Card, Keep an Eye on JPMorgan Chase
Happy Wednesday. Let’s keep things going with three more stories that jumped out at me.
Elon Musk Sues Apple
Here's Ars Technica:
“After a public outburst over Grok’s App Store rankings, on Monday, Elon Musk followed through on his threat to sue Apple and OpenAI.
At first, Musk appeared fixated on ChatGPT consistently topping Apple's ‘Must Have’ app list—which Grok has never made—claiming Apple seemed to preference OpenAI, an Apple partner, over all chatbot rivals. But Musk's filing shows that the X and xAI owner isn't just trying to push for more Grok downloads on iPhones—he's concerned that Apple and OpenAI have teamed up to completely dash his ‘everything app’ dreams, which was the reason he bought Twitter.
At this point appearing to be genuinely panicked about OpenAI's insurmountable lead in the chatbot market, Musk has specifically alleged that an agreement integrating ChatGPT into the iOS violated antitrust and unfair competition laws. Allegedly, the conspiracy is designed to protect Apple's smartphone monopoly and block out AI rivals to lock in OpenAI's dominance in the chatbot market.
As Musk sees it, Apple is supposedly so worried that X will use Grok to create a ‘super app’ that replaces the need for a sophisticated smartphone that the iPhone maker decided to partner with OpenAI to limit X and xAI innovation.”
This lawsuit (available here) is nonsensical and says more about Elon Musk and his frustrations with OpenAI and ChatGPT adoption exceeding that of xAI and Grok than Apple’s handling of the App Store.
The opening paragraph to Musk’s filing comes across as a joke.
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Buffett Continues to Trim Apple Stake, Apple to Hit iPhone Milestone in India, iPhone Release Cadence Change Coming?
Hello everyone. We will continue to run forward with story topics that have come out in the past week or so and which deserve our focus. Let’s jump in.
Buffett Continues to Trim Apple Stake
Here’s 9to5Mac:
"Warren Buffett’s Berkshire Hathaway has again scaled back its stake in Apple. In a regulatory filing this week, Berkshire disclosed that it sold 20 million shares of Apple during the June quarter. Nonetheless, Apple remains the conglomerate’s largest holding at 280 million shares, valued at over $64 billion.
Berkshire began buying Apple stock in 2016. At its peak in 2023, Berkshire Hathaway owned over 915 million shares of Apple, accounting for over 50% of the firm’s holdings. Buffett has trimmed those holdings over the last two years as part of a broader effort to stockpile cash. Berkshire currently holds more than $344 billion, as of the end of Q2 2025.
Buffett has been outspoken in his praise of Apple and Tim Cook. 'I’m somewhat embarrassed to say that Tim Cook has made Berkshire a lot more money than I’ve ever made,' Buffett said earlier this year. 'Nobody but Steve could have created Apple, but nobody but Tim could have developed it as he has. Steve picked Tim to succeed him, and he really made the right decision.'"
There was some thinking that Buffett may have been done with the Apple selling as Berkshire's Apple stake stood at an exact 300M shares. Berkshire's long-standing Coco-Cola stake is at an exact 400M shares.
As these share sales pile up (Buffett has trimmed Berkshire’s Apple stake by 70% from peak levels), my confidence level is growing that the selling has little to do with Apple’s business or valuation and more about Buffett wanting to give his successor Greg Abel the best chance of success.
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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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