Jony Ive’s Ferrari (Inside Orchard)
Earlier this week, Ferrari took the wraps off the first byproduct of its multi-year partnership with LoveFrom, Jony Ive’s and Marc Newson’s design consultancy. In a well-orchestrated unveiling in San Francisco, catering to both tech and auto reporters, the two companies showed off the LoveFrom-designed interior of the upcoming Ferrari Luce. The auto manufacturers’ first electric car, which still has an unknown exterior that is also being designed by LoveFrom, currently does not have a launch date although pre-orders are expected in a few months.
One of the defining attributes of Jony’s design process relates to focusing on the problem trying to be solved. Given how prevalent this topic was among the press at the Ferrari Luce unveiling, it sounds like the subject was discussed by Jony. For what it’s worth, the supposed problem that Jony looked to address with the Luce was how to design an electric car that is worthy of the Ferrari brand. Jony’s answer is to
Become an Inside Orchard subscriber today to continue reading. Already a subscriber? Sign in and read the full essay here.
An audio version of this essay is also available to subscribers. Sign in for instructions on getting the private podcast up and running in your favorite podcast player.
Choose either a monthly or annual subscription. Payment is processed by Memberful and secured by Stripe. Apple Pay and other mobile payment options are accepted.
Inside Orchard is part of the Above Avalon ecosystem. Special bundle pricing is available when combining an Inside Orchard subscription with an Above Avalon Daily subscription.
Subscriber Privileges and Benefits
Receive Exclusive Essays. The cornerstone of an Inside Orchard subscription is access to Neil’s essays on the latest developments in the technology industry. Weekly essays are ~1,000 words and sent via email. Essays revolve around the following topics: technology industry analysis, business model analysis, technology’s impact on societal and consumer trends. Create a free profile to read a few sample essays.
Access Exclusive Private Podcast. Listen to Inside Orchard essays via an exclusive private podcast. After becoming a subscriber, all previously-published podcast episodes become available in your favorite podcast player. Podcast episodes never become available to the public.
Inside Orchard Support. Play an active role in supporting Inside Orchard as an independent source of analysis and perspective. Inside Orchard is 100% supported by its subscribers.
Talking? Where We’re Going, We Don’t Need Talking (AVALON Podcast)
In the 35th episode of the AVALON podcast, Neil discussed the following topics/subjects:
What's on the Agenda (the bulk of the discussion modeled after Apple’s Monday morning meetings)
Apple’s M&A philosophy.
Apple acquires Q.
Q patents.
How Q can power a new user interface for Apple.
AI mania vs. human-centric computing.
Lighting Round (two topics two minutes each)
The Apple Music Super Bowl Halftime Show.
Why it feels inevitable that a pure play video streamer will get the Super Bowl one day.
Give Me a Break (something ridiculous that jumped out at me)
Coinbase’s ridiculous Super Bowl ad and subsequent behavior.
Tell Me More (something intriguing that has my attention)
LoveFrom, Ferrari. Jony Ive’s design vision of what an electric (Ferrari) car should be in today’s marketplace.
Become a subscriber to listen to the 68-minute episode.
Choose a monthly subscription or go with annual to save. (Charges can be expensed by your employer as the podcast is filled with analysis and research. If you need paid invoice receipts, go with the annual plan.)
Upon signup, you will receive a welcome email with directions for getting the AVALON podcast in your player. The episode “Talking? Where We’re Going, We Don’t Need Talking” will then automatically appear in your podcast player. AVALON can be listened to in Apple Podcasts and various third-party podcast players including Pocket Casts, Overcast, and Castro.
Already an AVALON subscriber? The episode “Talking? Where We’re Going, We Don’t Need Talking” is in your podcast player.
If you previously subscribed to AVALON and need assistant adding the podcast to your podcast player, look for the welcome email (from “Neil Cybart via Transistor”) that was sent to when signing up.
Bundle an AVALON subscription with an Above Avalon Daily newsletter subscription and save 40%. Bundle AVALON with Above Avalon Daily + Podcasts package and receive AVALON for free. This is the best offer available in the Above Avalon ecosystem. More information on bundle offers is available here.
Apple News Bias Alleged, FTC Warns Tim Cook, EssilorLuxottica Discloses Ray-Ban Meta Sales
Hello everyone. Let’s jump into today’s update.
Apple News Bias Alleged
Last week, MRC, a partisan website, alleged that Apple News was taking a “defiant stance against offering news from right-leaning outlets….” The website went on to cherry-pick a few headlines from what hundreds of stories curated within Apple News to say that Apple was purposely “rejecting” only “right-leaning outlets.”
Not surprisingly, the article was picked up by outlets including the New York Post and Fox News, two of the publications mentioned in MRC’s article as allegedly receiving unfair treatment from Apple. Due to the exposure generated by the outlets, the MRC report was eventually highlighted by President Trump, Elon Musk, and others on social media. Within a day, the FTC had sent a threatening letter to Tim Cook regarding the alleged Apple News bias.
AllSides, a publication that labels news sites based on their perceived political leaning, pushed out its own article based on Apple News data that they collected in October. Here’s AllSides:
“A new AllSides bias analysis found Apple News (Lean Left bias) continued its trend of publishing primarily from left-wing media outlets in 2025, displaying 2% of news articles from outlets on the right, and 50% from outlets on the left.
This is consistent with data from our 2023 analysis, when Apple News curated 1% from outlets on the right and 53% from the left.
While users can personalize which outlets appear on their Apple News app, for the purposes of this analysis, AllSides looked explicitly at Apple News’ ‘Top Stories’ and ‘Trending Stories’ sections, which are not personalized for individual users and are curated by Apple’s editors.”
AllSides published the following exhibit:
(click / tap exhibit to enlarge)
The chart caught my attention as it implied there has been no recent or sudden change in what Apple News has been doing.
Apple News relies on a few dozen former journalists to select the stories that comprise Top Stories. The selections are updated
Become an Above Avalon Daily subscriber today to continue reading. Already a subscriber? Sign in and read the full essay here.
An audio version of this written update is available to members who have the Podcasts Package attached to their Above Avalon Daily subscription.
Choose either a monthly or annual subscription. Payment is hosted by MoonClerk and secured by Stripe. Apple Pay and other mobile payment options are accepted. After signup, use this link to update your payment information and subscription status at any time.
Subscriber 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 updates sent to members in an easy-to-navigate archive built in Ghost.
Full Access to Above Avalon Forum. Access exclusive channels in the Above Avalon forum in Discord.
Email Access to Neil Cybart. Receive timely responses from Neil to email inquiries.
Access Bundle Discounts. Customize a subscription with additional Above Avalon products and save: AVALON, Podcasts Packages, Inside Orchard, and Above Avalon Models.
Above Avalon Support. Play an active role in supporting Above Avalon as an independent voice and resource. Above Avalon is 100% funded by subscribers.
The AI IPO Race Is On (Inside Orchard)
SpaceX acquiring xAI may not seem related to Anthropic unveiling a controversial Super Bowl ad. However, the two developments this week speak to a financial race that is unfolding with the finish line being successful IPOs.
Anthropic unveiled a series of Claude commercials designed to throw shade against OpenAI and its recent decision to brings ads to ChatGPT. The four commercials, part of the company’s “A Time and a Place” campaign, mark Anthropic’s Super Bowl debut. I found the commercials to be humorous but depressing as they humanize just how cold and sterile chatbots are to use. My now years-old call that we need something better than chatbots is very much alive and well.
At least on social media, there were a few debates surrounding the Claude ads. Some people were uncomfortable that Anthropic took out ads to essentially advocate against ads – a line of attack that strikes me as superficial. Others didn’t like how Anthropic focused on punching a competitor rather than talking up its own product. In some ways, such debates missed the point as Anthropic already
Become an Inside Orchard subscriber today to continue reading. Already a subscriber? Sign in and read the full essay here.
An audio version of this essay is also available to subscribers. Sign in for instructions on getting the private podcast up and running in your favorite podcast player.
Choose either a monthly or annual subscription. Payment is processed by Memberful and secured by Stripe. Apple Pay and other mobile payment options are accepted.
Inside Orchard is part of the Above Avalon ecosystem. Special bundle pricing is available when combining an Inside Orchard subscription with an Above Avalon Daily subscription.
Subscriber Privileges and Benefits
Receive Exclusive Essays. The cornerstone of an Inside Orchard subscription is access to Neil’s essays on the latest developments in the technology industry. Weekly essays are ~1,000 words and sent via email. Essays revolve around the following topics: technology industry analysis, business model analysis, technology’s impact on societal and consumer trends. Create a free profile to read a few sample essays.
Access Exclusive Private Podcast. Listen to Inside Orchard essays via an exclusive private podcast. After becoming a subscriber, all previously-published podcast episodes become available in your favorite podcast player. Podcast episodes never become available to the public.
Inside Orchard Support. Play an active role in supporting Inside Orchard as an independent source of analysis and perspective. Inside Orchard is 100% supported by its subscribers.
Apple Acquires Q, The Key Q Patent, Apple Is Developing a New User Interface
Hello everyone. Today’s update will be dedicated to Apple’s Q acquisition. At $1.6B, this is the second-largest Apple acquisition in terms of deal value. It’s a fascinating acquisition. Let’s discuss.
Apple Acquires Q
Here’s Reuters:
“Apple on Thursday said it has acquired Q.ai, an Israeli startup working on artificial intelligence technology for audio.
Apple did not disclose terms of the deal for Q.ai, which was backed by venture capital firms Matter Venture Partners, Kleiner Perkins, Spark Capital, Exor and GV, formerly known as Google Ventures. The deal valued the startup at about $1.6 billion, according to a source familiar with the matter.
Apple did not say how it will use Q.ai's technology but said the startup has worked on new applications of machine learning to help devices understand whispered speech and to enhance audio in challenging environments.
Q.ai last year filed a patent application to use "facial skin micromovements" to detect words mouthed or spoken, identify a person and assess their emotions, heart rate, respiration rate and other indicators.
Q.ai's 100 employees, including CEO Aviad Maizels and co-founders Yonatan Wexler and Avi Barliya, will join Apple, the companies said.
Maizels founded three-dimensional sensing firm PrimeSense and sold it to Apple in 2013. The PrimeSense deal eventually helped Apple move away from fingerprint sensors on its iPhones and toward facial recognition technology.”
Johny Srouji, Apple’s SVP of hardware technologies, provided the following statement to Reuters: Q “is a remarkable company that is pioneering new and creative ways to use imaging and machine learning. We’re thrilled to acquire the company, with Aviad at the helm, and are even more excited for what’s to come.”
When Apple acquired PrimeSense in 2013 for $360M, the company simply confirmed the acquisition and the provided what had been its generic "Apple buys smaller technology companies from time to time, and we generally do not discuss our purpose or plans” M&A comment.
The Q acquisition includes technology (with accompanying patents) that have very high probabilities of being brought to market via Apple products. Apple is not going to
An Above Avalon Daily subscription is required to read this daily update. Subscribers can read the update here.
An audio version of this update is available to members who have the podcast add-on attached to their membership.
Choose either a monthly or annual subscription. Payment is hosted by MoonClerk and secured by Stripe. Apple Pay and other mobile payment options are accepted. After signup, use this link to update your payment information and subscription status at any time.
Subscriber 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 updates sent to members in an easy-to-navigate archive built in Ghost.
Full Access to Above Avalon Forum. Access exclusive channels in the Above Avalon forum in Discord.
Email Access to Neil Cybart. Receive timely responses from Neil to email inquiries.
Access Bundle Discounts. Customize a subscription with additional Above Avalon products and save: AVALON, Podcasts Packages, Inside Orchard, and Financial Models.
Above Avalon Support. Play an active role in supporting Above Avalon as an independent voice and resource. Above Avalon is 100% funded by subscribers.
Reading Between the Lines of Apple’s 1Q26 Earnings Q&A With Analysts
Happy Monday.
Today’s update will conclude our Apple 1Q26 earnings review with the latest installment of Reading Between the Lines. 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 17th installment of Reading Between the Lines of Apple's earnings Q&A with analysts.
Reading Between the Lines of Apple’s 1Q26 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 Motley Fool offers a written transcript here.
iPhone
Q (Morgan Stanley): What are the top factors driving iPhone strength?
Cook: It’s a combination of things – display, camera, performance, new selfie camera, design.
My response: We also can’t underestimate the degree to which
An Above Avalon Daily subscription is required to read this daily update. Subscribers can read the update here.
An audio version of this update is available to members who have the podcast add-on attached to their membership.
Choose either a monthly or annual subscription. Payment is hosted by MoonClerk and secured by Stripe. Apple Pay and other mobile payment options are accepted. After signup, use this link to update your payment information and subscription status at any time.
Subscriber 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 updates sent to members in an easy-to-navigate archive built in Ghost.
Full Access to Above Avalon Forum. Access exclusive channels in the Above Avalon forum in Discord.
Email Access to Neil Cybart. Receive timely responses from Neil to email inquiries.
Access Bundle Discounts. Customize a subscription with additional Above Avalon products and save: AVALON, Podcasts Packages, Inside Orchard, and Financial Models.
Above Avalon Support. Play an active role in supporting Above Avalon as an independent voice and resource. Above Avalon is 100% funded by subscribers.
Offering a Cup of FUD Seems Desperate (AVALON Podcast)
In the 34th episode of the AVALON podcast, Neil discussed the following topics/subjects:
What's on the Agenda (the bulk of the discussion modeled after Apple’s Monday morning meetings)
Apple 1Q26 earnings.
What's up with the FUD (fear, uncertainty and doubt) that followed Apple’s earnings?
Volatile stock price moves.
Lighting Round (two topics two minutes each)
Apple acquires Q Ltd for $1.6 billion.
Appreciation for Apple’s Stocks app.
Give Me a Break (something ridiculous that jumped out at me)
Elon Musk’s product strategy decisions at Tesla.
Tell Me More (something intriguing that has my attention)
I’m starting to get sold on sleep tracking.
Become an AVALON subscriber to listen to the 67-minute episode. Upon signup, you will receive an email for getting the AVALON episode in your favorite podcast player.
Choose a monthly subscription or go with annual to save. (Charges can be expensed by your employer as the podcast is filled with analysis and research. If you need paid invoice receipts, go with the annual plan.)
Upon signup, you will receive a welcome email with directions for getting the AVALON podcast in your player. The process is very simple and takes just a few seconds. This episode, along with every prior AVALON episode, will then automatically appear in your favorite podcast player. AVALON can be listened to in Apple Podcasts and various third-party podcast players including Pocket Casts, Overcast, and Castro.
Already an AVALON subscriber? The episode “Offering a Cup of FUD Seems Desperate” is in your podcast player.
If you previously subscribed to AVALON and need assistant adding the podcast to your podcast player, look for the welcome email (from “Neil Cybart via Transistor”) that was sent to when signing up.
Bundle an AVALON subscription with an Above Avalon Daily newsletter subscription and save 40%. Bundle AVALON with Above Avalon Daily + Podcasts package and receive AVALON for free. This is the best offer available in the Above Avalon ecosystem. More information on bundle offers is available here.
Tesla Needs Bridges, but Elon Musk Refuses to Build Them (Inside Orchard)
Earlier this week, Tesla released quarterly earnings. Instead of any specific number grabbing headlines, there was one line from Elon Musk on the Tesla earnings call that made waves. Tesla will be discontinuing both the Model S and Model X. The Model S put Tesla on the map prior to the Model 3, offering the longest range out of any Tesla vehicle. The Model X has been Tesla’s genuine SUV offering. The move is the latest in a string of strategy decisions that is causing the Tesla community to scratch their collective head. We have another example of Musk taking unnecessarily risky steps to chase a future that he’s painting as big, bold, and essential.
Tesla finds itself in a multi-year downtrend. Beginning in late 2022 with higher interest rates coming out of the pandemic, Tesla began to see notable weakness in demand for its vehicles. The situation then took a turn for the worse with Musk’s decision to wage a brutal price war with the competition. My thinking continues to be that the decision led to well-liked Tesla CFO Zach Kirkhorn to quit suddenly. It’s never a good thing when a public company CFO quits suddenly. The bottom then dropped when Musk decided to go full-blown into politics in the summer of 2024. Musk’s words and actions weren’t just turning off a good portion of his current customer base. They were dramatically limiting the pool of Tesla’s next marginal customer. Declining sales growth in deliveries eventually turned to actual declines in deliveries. Tesla saw its first full-year revenue decline in 2025 with total revenue just 17% higher than the total seen in 2022. Musk is now focused on changing the Tesla story away from car sales and to autonomous fleets and humanoids.
Musk’s latest decision is to discontinue Tesla’s most premium vehicles. The stated rationale is that Tesla will convert vehicle production space that had gone to the Model S and Model X at the Fremont factory to an Optimus factory. The decision is a
Become an Inside Orchard subscriber today to continue reading. Already a subscriber? Sign in and read the full essay here.
An audio version of this essay is also available to subscribers. Sign in for instructions on getting the private podcast up and running in your favorite podcast player.
Choose either a monthly or annual subscription. Payment is processed by Memberful and secured by Stripe. Apple Pay and other mobile payment options are accepted. Special bundle pricing is available when subscribing to the Above Avalon Daily newsletter.
Subscriber Privileges and Benefits
Receive Exclusive Essays. The cornerstone of an Inside Orchard subscription is access to Neil’s essays on the latest developments in the technology industry. Weekly essays are ~1,000 words and sent via email. Essays revolve around the following topics: technology industry analysis, business model analysis, technology’s impact on societal and consumer trends. Create a free profile to read a few sample essays.
Access Exclusive Private Podcast. Listen to Inside Orchard essays via an exclusive private podcast. After becoming a subscriber, all previously-published podcast episodes become available in your favorite podcast player. Podcast episodes never become available to the public.
Inside Orchard Support. Play an active role in supporting Inside Orchard as an independent source of analysis and perspective. Inside Orchard is 100% supported by its subscribers.
Apple Reaccelerates Share Buyback, Apple’s Stellar Free Cash Flow, Takeaways From Apple’s 1Q26 10-Q
We will continue our Apple 1Q26 earnings review by turning to Apple’s capital management, balance sheet, and 10-Q.
For those of you who are new to the Above Avalon Daily newsletter, our goal for each Apple earnings review is to not leave any financial stone unturned. After today’s email, there will likely be one additional update dedicated to reviewing Apple earnings before moving on to other topics.
Let’s jump right in.
Apple Reaccelerates Share Buyback
We have new data for Apple’s share buyback activity. The following totals are for Apple's share repurchases via open market transactions over the past two years:
1Q24: $20.5B spent on buyback. Average repurchase price per share: $183.77.
2Q24: $23.5B. Average repurchase price per share: $180.37.
3Q24: $26.0B. Average repurchase price per share: $187.36.
An Above Avalon Daily subscription is required to read this daily update. Subscribers can read the update here.
An audio version of this update is available to members who have the podcast add-on attached to their membership.
Choose either a monthly or annual subscription. Payment is hosted by MoonClerk and secured by Stripe. Apple Pay and other mobile payment options are accepted. After signup, use this link to update your payment information and subscription status at any time.
Subscriber 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 updates sent to members in an easy-to-navigate archive built in Ghost.
Full Access to Above Avalon Forum. Access exclusive channels in the Above Avalon forum in Discord.
Email Access to Neil Cybart. Receive timely responses from Neil to email inquiries.
Access Bundle Discounts. Customize a subscription with additional Above Avalon products and save: AVALON, Podcasts Packages, Inside Orchard, and Financial Models.
Above Avalon Support. Play an active role in supporting Above Avalon as an independent voice and resource. Above Avalon is 100% funded by subscribers.
Apple 1Q26 Earnings Review: Margin Concerns Are Overblown
Happy Wednesday.
To recap where we stand with reviewing Apple's 1Q26 earnings.
Last Friday: Big picture overview and the numbers
Tuesday: All about iPhone
Today: Margins
Let's jump in.
Apple 1Q26 Earnings Review: Margin Concerns Are Overblown
Heading into Apple’s 1Q26 earnings release, margin concerns were among the list of items thought to be contributing to Wall Street’s negative view regarding Apple. Memory pricing inflation had been in the news for weeks. There was also growing chatter and speculation surrounding the Apple / TSMC relationship as it pertained to future pricing and supply. We could have even thrown in lingering tariff cost concerns into the margins discussion, although the tariff topic does seem to have genuinely been put on the back burner for now with Apple’s exposure being contained.
Based on Apple management’s commentary on the 1Q26 earnings call, gross margin fears are overblown based on how events on the ground are trending. While Apple will likely see some pressure from select higher component pricing, a handful of tailwinds are positioned to help offset those headwinds.
Memory accounts for a relatively small percentage
An Above Avalon Daily subscription is required to read this daily update. Subscribers can read the update here.
An audio version of this update is available to members who have the podcast add-on attached to their membership.
Choose either a monthly or annual subscription. Payment is hosted by MoonClerk and secured by Stripe. Apple Pay and other mobile payment options are accepted. After signup, use this link to update your payment information and subscription status at any time.
Subscriber 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 updates sent to members in an easy-to-navigate archive built in Ghost.
Full Access to Above Avalon Forum. Access exclusive channels in the Above Avalon forum in Discord.
Email Access to Neil Cybart. Receive timely responses from Neil to email inquiries.
Access Bundle Discounts. Customize a subscription with additional Above Avalon products and save: AVALON, Podcasts Packages, Inside Orchard, and Financial Models.
Above Avalon Support. Play an active role in supporting Above Avalon as an independent voice and resource. Above Avalon is 100% funded by subscribers.
Apple 1Q26 Earnings Review: Let’s Talk About iPhone Results
Happy Tuesday. We are going to continue our Apple 1Q26 earnings review. Today’s update took a bit longer than expected to finalize.
Last Friday, we went over my initial thoughts regarding Apple’s results and how the numbers compared to my estimates. 1Q26 earnings and 2Q26 guidance were very strong. For this week, we will take a closer look at specific earnings-related topics. Today’s update will be focused on the iPhone.
Apple 1Q26 Earnings Review: Let’s Talk About the iPhone
Based on Apple’s earnings releases and conference call with analysts, here’s what we know about the latest iPhone results:
iPhone revenue: $85.3B (up 23%).
The $85.3B of revenue was constrained a bit by supply (advanced node 3nm capacity for SoCs). This supply shortage materialized via “very lean channel inventory” as management could not put as many iPhones into the channel as they wanted.
Apple said they sold a record number of iPhones in China in 1Q26 (Greater China revenue was up 38%). Records were put in for number of upgraders and strong double-digit growth on switchers. Recall how Apple’s 4Q25 iPhone results were hit by iPhone shortages in China.
As shown in the exhibit below, Apple is experiencing a step-up in iPhone revenue from approximately $200B/year to
An Above Avalon Daily subscription is required to read this daily update. Subscribers can read the update here.
An audio version of this update is available to members who have the podcast add-on attached to their membership.
Choose either a monthly or annual subscription. Payment is hosted by MoonClerk and secured by Stripe. Apple Pay and other mobile payment options are accepted. After signup, use this link to update your payment information and subscription status at any time.
Subscriber 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 updates sent to members in an easy-to-navigate archive built in Ghost.
Full Access to Above Avalon Forum. Access exclusive channels in the Above Avalon forum in Discord.
Email Access to Neil Cybart. Receive timely responses from Neil to email inquiries.
Access Bundle Discounts. Customize a subscription with additional Above Avalon products and save: AVALON, Podcasts Packages, Inside Orchard, and Financial Models.
Above Avalon Support. Play an active role in supporting Above Avalon as an independent voice and resource. Above Avalon is 100% funded by subscribers.
Meta Pulling Back From VR Was Inevitable (Inside Orchard)
Last month, Meta announced it was laying off 10% of employees in its Reality Labs division, which is home to the company’s VR/AR/MR/HW pursuits. The layoffs were aimed at VR: Quest headsets, Horizon Worlds / metaverse experiences, and first-party VR game studios. Not surprisingly, the news did not go over well within the VR community, which framed the layoffs as a doomsday scenario for the VR industry. When it came to a VR pullback, the writing had been on the wall for some time. Although expected, the pullback still provides some interesting observations as to where Meta stands when it comes to Reality Labs.
We knew that Meta was struggling with Quest sales. The company discloses Reality Labs revenue in its quarterly financials. Between 2022 and 2025, Reality Labs annual revenue has fallen by approximately 15%. The data pointed to Quest headsets not selling well in addition to overall weakness across Meta’s VR ecosystem. For a company that has sold approximately 20 million Quest VR headsets to date (a helpful data point for determining the ceiling for the Quest installed base), it was far too early on the adoption curve to be registering flat Quest headset revenue. For context, while Apple Watch revenue has been tending flat for the past four years, the installed base is 225 million people. With Quest, new user growth should still be strong enough to offset any headwind associated with declining sales to existing users.
In describing the Quest business, gaming and young people come to mind. Meta bought into this trend by investing in its own gaming studios to ensure more (gaming) content was available for the devices. The hope was
Become an Inside Orchard subscriber today to continue reading. Already a subscriber? Sign in and read the full essay here.
An audio version of this essay is also available to subscribers. Sign in for instructions on getting the private podcast up and running in your favorite podcast player.
Choose either a monthly or annual subscription. Payment is processed by Memberful and secured by Stripe. Apple Pay and other mobile payment options are accepted. Special Inside Orchard bundle subscription pricing is available when also subscribing to the Above Avalon Daily newsletter.
Subscriber Privileges and Benefits
Receive Exclusive Weekly Essays. The cornerstone of an Inside Orchard subscription is access to Neil’s weekly essays on the latest developments in the technology industry. Essays are ~1,000 words and sent via email on Fridays. Essays revolve around the following topics: technology industry analysis, business model analysis, technology’s impact on societal and consumer trends. Read a few sample essays here, here, and here.
Access Exclusive Private Podcast. Listen to Inside Orchard essays via an exclusive private podcast. After becoming a subscriber, all previously-published podcast episodes become available in your favorite podcast player. Podcast episodes never become available to the public.
Inside Orchard Support. Play an active role in supporting Inside Orchard as an independent source of analysis and perspective. Inside Orchard is 100% supported by its subscribers.
You’re Our New Design Liaison (AVALON Podcast)
In the 33rd episode of the AVALON podcast, Neil discussed the following topics/subjects:
What's on the Agenda (the bulk of the discussion modeled after Apple’s Monday morning meetings)
John Ternus tapped to lead Apple’s Design team. Related questions that are discussed: Why does Apple rely on design liaisons? Who is in Tim Cook’s inner circle?
Meta pulling back from VR. Should Apple look to entice parts of the VR community with mass market dreams that go beyond niche VR gaming?
Lighting Round (two topics two minutes each)
Apple AI pin rumors.
Wall Street is on edge ahead of Apple’s 1Q26 earnings.
Give Me a Break (something ridiculous that jumped out at me)
“Skyscraper Live” on Netflix.
Tell Me More (something intriguing that has my attention)
Who can actually go up against YouTube?
Become a subscriber to listen to the 64-minute episode.
Choose a monthly subscription or go with annual to save. (Charges can be expensed by your employer as the podcast is filled with analysis and research. If you need paid invoice receipts, go with the annual plan.)
Upon signup, you will receive a welcome email with directions for getting the AVALON podcast in your player. This episode will then automatically appear in your podcast player. AVALON can be listened to in Apple Podcasts and various third-party podcast players including Pocket Casts, Overcast, and Castro.
Already an AVALON subscriber? The episode “You’re Our New Design Liaison” is in your podcast player.
If you previously subscribed to AVALON and need assistant adding the podcast to your podcast player, look for the welcome email (from “Neil Cybart via Transistor”) that was sent to when signing up.
Bundle an AVALON subscription with an Above Avalon Daily newsletter subscription and save 40%. Bundle AVALON with Above Avalon Daily + Podcasts package and receive AVALON for free. This is the best offer available in the Above Avalon ecosystem. More information on bundle offers is available here.
Apple 1Q26 Earnings Review: People Want What Apple Is Selling
Hello everyone.
Welcome to a special Friday edition of the Above Avalon Daily. It’s been a busy week. For today’s update, I wanted to share the big picture takeaway from Apple’s earnings and how results compared to my estimates. There is plenty more to discuss. We will do that next week.
Have a great weekend.
Apple 1Q26 Earnings Review: People Want What Apple Is Selling
The theme to our Apple 1Q26 earnings preview was divergence. Wall Street had turned skeptical of Apple just as the company’s business fundamentals were entering a higher gear. Apple’s 1Q26 results validated that theme. Apple reported its best quarter in four years. To then have Apple’s very strong 1Q26 results be constrained by supply tells us that demand is improving even faster than what is implied by the numbers. While the iPhone deservedly is getting much of the attention – revenue up 23% - the entire Apple ecosystem is seeing improved demand. People want what Apple is selling.
We have spent the past 18 to 24 months talking about how Apple product demand was beginning
An Above Avalon Daily subscription is required to read this daily update. Subscribers can read the update here.
An audio version of this update is available to members who have the podcast add-on attached to their membership.
Choose either a monthly or annual subscription. Payment is hosted by MoonClerk and secured by Stripe. Apple Pay and other mobile payment options are accepted. After signup, use this link to update your payment information and subscription status at any time.
Subscriber 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 updates sent to members in an easy-to-navigate archive built in Ghost.
Full Access to Above Avalon Forum. Access exclusive channels in the Above Avalon forum in Discord.
Email Access to Neil Cybart. Receive timely responses from Neil to email inquiries.
Access Bundle Discounts. Customize a subscription with additional Above Avalon products and save: AVALON, Podcasts Packages, Inside Orchard, and Financial Models.
Above Avalon Support. Play an active role in supporting Above Avalon as an independent voice and resource. Above Avalon is 100% funded by subscribers.
Meta 4Q25 Earnings Results: Impressive Growth, but at What Cost?
Happy Thursday. Apple’s FY1Q26 earnings are out. Both 1Q26 results and 2Q26 guidance were strong. We will talk about it tomorrow (Friday).
For today’s update, we will continue our earnings reviews with Meta.
Let’s jump right in.
Meta 4Q25 Earnings Results: Impressive Growth, but at What Cost?
For the past few quarters, a financial narrative battle has surrounded Meta. Following the company’s 4Q25 earnings release, this battle remains front and center.
One side thinks the Meta story should be primarily focused on revenue growth. Along those lines, there is a compelling story to tell.
Meta’s 4Q25 revenue was up 24% to $59.9B.
Meta’s 4Q25 ad impressions were up 18%.
Daily active users was up 7% to 3.58B.
Billions of users are spending more time on a Meta property consuming video clips, text posts, articles, and advertising.
An Above Avalon Daily subscription is required to read this daily update. Subscribers can read the update here.
An audio version of this update is available to members who have the podcast add-on attached to their membership.
Choose either a monthly or annual subscription. Payment is hosted by MoonClerk and secured by Stripe. Apple Pay and other mobile payment options are accepted. After signup, use this link to update your payment information and subscription status at any time.
Subscriber 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 updates sent to members in an easy-to-navigate archive built in Ghost.
Full Access to Above Avalon Forum. Access exclusive channels in the Above Avalon forum in Discord.
Email Access to Neil Cybart. Receive timely responses from Neil to email inquiries.
Access Bundle Discounts. Customize a subscription with additional Above Avalon products and save: AVALON, Podcasts Packages, Inside Orchard, and Financial Models.
Above Avalon Support. Play an active role in supporting Above Avalon as an independent voice and resource. Above Avalon is 100% funded by subscribers.
Previewing Apple’s 1Q26 Earnings: My Estimates, Above Avalon Expectation Meters (1Q26 Edition)
Hello everyone. Today’s update will conclude our Apple 1Q26 earnings preview. Apple reports earnings on Thursday at 4:30 pm ET.
Let’s jump in.
Previewing Apple’s 1Q26 Earnings: My Estimates
The overall theme to my Apple FY1Q26 estimates: improving fundamentals. Most financial line items are trending better in FY2026 compared to FY2025. There are a few exceptions which we will discuss in a few minutes.
Apple will report the following records on Thursday:
Revenue (quarterly)
Operating income (quarterly)
Net income (quarterly)
iPhone revenue (quarterly)
Services quarterly revenue
Services gross margin
Here are my expectations for Apple’s key 1Q26 metrics:
An Above Avalon Daily subscription is required to read this daily update. Subscribers can read the update here.
An audio version of this update is available to members who have the podcast add-on attached to their membership.
Choose either a monthly or annual subscription. Payment is hosted by MoonClerk and secured by Stripe. Apple Pay and other mobile payment options are accepted. After signup, use this link to update your payment information and subscription status at any time.
Subscriber 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 updates sent to members in an easy-to-navigate archive built in Ghost.
Full Access to Above Avalon Forum. Access exclusive channels in the Above Avalon forum in Discord.
Email Access to Neil Cybart. Receive timely responses from Neil to email inquiries.
Access Bundle Discounts. Customize a subscription with additional Above Avalon products and save: AVALON, Podcasts Packages, Inside Orchard, and Financial Models.
Above Avalon Support. Play an active role in supporting Above Avalon as an independent voice and resource. Above Avalon is 100% funded by subscribers.
Previewing Apple’s 1Q26 Earnings: Wall Street Is on Edge
Hello everyone.
Monday doubled as snowstorm cleanup day here in Connecticut. We received a little bit north of 16 inches, the most in about a decade. It certainly felt more during cleanup.
For today’s update, we will begin previewing Apple’s 1Q26 earnings which will be released on Thursday. The discussion will roll into tomorrow's update as well.
Previewing Apple’s 1Q26 Earnings: Wall Street Is on Edge
We are witnessing one of the largest divergences heading into an Apple earnings release in recent memory.
The company’s business fundamentals continue to improve. The company is going to report an all-time quarterly record on a few fronts on Thursday. Thanks to strong device sales trends and robust Services performance, revenue growth is trending 3x stronger than what it was last year at this time.
Set against these improving trends, Wall Street’s attitude and feelings toward Apple has turned negative over the past two months.
An Above Avalon Daily subscription is required to read this daily update. Subscribers can read the update here.
An audio version of this update is available to members who have the podcast add-on attached to their membership.
Choose either a monthly or annual subscription. Payment is hosted by MoonClerk and secured by Stripe. Apple Pay and other mobile payment options are accepted. After signup, use this link to update your payment information and subscription status at any time.
Subscriber 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 updates sent to members in an easy-to-navigate archive built in Ghost.
Full Access to Above Avalon Forum. Access exclusive channels in the Above Avalon forum in Discord.
Email Access to Neil Cybart. Receive timely responses from Neil to email inquiries.
Access Bundle Discounts. Customize a subscription with additional Above Avalon products and save: AVALON, Podcasts Packages, Inside Orchard, and Financial Models.
Above Avalon Support. Play an active role in supporting Above Avalon as an independent voice and resource. Above Avalon is 100% funded by subscribers.
Everyone Seems to Be Forgetting About Apple Maps (AVALON Podcast)
In the 32nd episode of the AVALON podcast, Neil discussed the following topics/subjects:
What's on the Agenda (the bulk of the discussion modeled after Apple’s Monday morning meetings)
Addressing odd criticisms and the overall lack of “takes” regarding LA Lakers in Apple Immersive Video, and why Apple Vision Pro offers something different than just the feeling of attending live events in person.
How and why Apple Maps history helps frame the Apple/Google partnership regarding Gemini models.
Why Goldman was willing to lose money on Apple Card, and why Apple doesn't launch a credit card on its own.
Lighting Round (two topics two minutes each)
Ads coming to ChatGPT
Apple gives Apple Services the New Year treatment with some fresh financial disclosures.
Give Me a Break (something ridiculous that jumped out at me)
X chasing long-from content via their Articles feature.
Tell Me More (something intriguing that has my attention)
A brick and mortar resurgence that bodes well for Apple Maps and Apple’s advertising business.
Become a subscriber to listen to the 82-minute episode. Already an AVALON subscriber? The episode “Everyone Seems to Be Forgetting About Apple Maps” is in your podcast player.
Choose a monthly subscription or go with annual to save. (Charges can be expensed by your employer as the podcast is filled with analysis and research. If you need paid invoice receipts, go with the annual plan.)
Upon signup, you will receive a welcome email with directions for getting the AVALON podcast in your player. This episode will then automatically appear in your podcast player. AVALON can be listened to in Apple Podcasts and various third-party podcast players including Pocket Casts, Overcast, and Castro.
If you currently subscribe to the Above Avalon Daily newsletter (great choice), with the Podcasts Package attached to your subscription, you get the AVALON podcast for FREE. This is one of the best deals available in the Above Avalon ecosystem.
If you subscribe to Above Avalon Daily without the Podcasts Package, no worries - you still receive a large 40% discount. Pay just an extra $6 per month (or $60 per year) for AVALON by filling out this form.
Let’s Talk About This Apple AI Pin Rumor
Today's Above Avalon Daily update includes the following story:
Let’s Talk About This Apple AI Pin Rumor
Today’s update is dedicated to talking about The Information’s article regarding Apple working on an AI wearable pin. There may be some funny business at play. Let’s discuss.
An Above Avalon Daily subscription is required to read this daily update. Subscribers can read the update here.
An audio version of this update is available to members who have the podcast add-on attached to their membership.
Choose either a monthly or annual subscription. Payment is hosted by MoonClerk and secured by Stripe. Apple Pay and other mobile payment options are accepted. After signup, use this link to update your payment information and subscription status at any time.
Subscriber 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 updates sent to members in an easy-to-navigate archive built in Ghost.
Full Access to Above Avalon Forum. Access exclusive channels in the Above Avalon forum in Discord.
Email Access to Neil Cybart. Receive timely responses from Neil to email inquiries.
Access Bundle Discounts. Customize a subscription with additional Above Avalon products and save: AVALON, Podcasts Packages, Inside Orchard, and Financial Models.
Above Avalon Support. Play an active role in supporting Above Avalon as an independent voice and resource. Above Avalon is 100% funded by subscribers.
Netflix 4Q25 Earnings, Netflix Is Misreading the Market, The Warner Bros. Discovery Deal
Today's Above Avalon Daily update includes the following stories:
Netflix 4Q25 Earnings
Netflix Is Misreading the Market
The Warner Bros. Discovery Deal
The 4Q25 earnings season has begun for us. We will kick things off by analyzing Netflix’s 4Q25 earnings and earnings interview. The discussion then turns to how Netflix is misreading the market. We conclude with Neil’s thoughts on where the Warner Bros. Discovery deal stands.
An Above Avalon Daily subscription is required to read this daily update. Subscribers can read the update here.
An audio version of this update is available to members who have the podcast add-on attached to their membership.
Choose either a monthly or annual subscription. Payment is hosted by MoonClerk and secured by Stripe. Apple Pay and other mobile payment options are accepted. After signup, use this link to update your payment information and subscription status at any time.
Subscriber 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 updates sent to members in an easy-to-navigate archive built in Ghost.
Full Access to Above Avalon Forum. Access exclusive channels in the Above Avalon forum in Discord.
Email Access to Neil Cybart. Receive timely responses from Neil to email inquiries.
Access Bundle Discounts. Customize a subscription with additional Above Avalon products and save: AVALON, Podcasts Packages, Inside Orchard, and Financial Models.
Above Avalon Support. Play an active role in supporting Above Avalon as an independent voice and resource. Above Avalon is 100% funded by subscribers.