Digitimes is reporting that Apple will release a lower price model of MacBook Air in Q3 to compete with low end Ultrabooks from other PC makers. According to Digitimes this MacBook Air will be in response to aggressive push by Intel and other PC makers to bring down the cost of Ultrabooks to $699. Monica Chen posted:

Apple is reportedly considering responding to the upcoming second-generation ultrabooks by launching a US$799 MacBook Air in the third quarter of 2012, according to sources from the upstream supply chain.

Although Acer has recently reduced its ultrabook shipment target, Intel continues to aggressively push ultrabooks and is aiming to have the devices priced at US$699 in the second half of the year. However, if Intel is unable to bring down ASPs to its goal, the price gap between ultrabooks and the US$799 MacBook Air may further postpone the time ultrabooks become standardized, the sources noted.

Currently, Apple's 11-inch 64GB MacBook Air is priced at US$999 with a 128GB version priced at US$1,199. The 13-inch 128GB version is priced at US$1,299 and 256GB version is US$1,599. If Apple decides to launch a US$799 MacBook Air, the sources believe the strategy will damage ultrabooks allowing Apple to continue to press its advantage.

We seriously doubt that Apple will launch a $799 MacBook Air to compete with other PC maker in a race to the bottom of profit margins. Apple has never bothered to compete in low-end market where profits are almost zero, DigiTimes was one of the publications that kept on claiming few years back that Apple will release $799 white MacBook, but Apple simply replaced the MacBook lineup with MacBook Air. We believe Apple will add more features to $999 MacBook Air (bigger storage, more RAM) rather than bring the price down, like they have been doing with other Apple products.