In order to avoid leaving free grounds to competition and cheaper models, Apple has always kept the previous version of its iPhone on its catalog. The company did the same thing when releasing the new iPad, having updated the iPad 2 with a updated engraved A5 chips. The idea behind is to offer a cheaper model for a high-tech product while leaving the new model enough margins and room to have its own business life.
According to Digitimes Apple might be thinking to follow the same strategy with the MacBook Air. The company could launch for Q3 a entry-level MacBook Air model aggressively priced at 799 USD, most likely to compete with cheaper (but often less power and more "cheap" design and construction Ultrabook).
As Apple never sacrifice quality for price except for previosu generation products, it is a bit unclear what would be this entry-level MBA.
It highly depends on the next generation MacBook Air to be released in June. If they come with larger SSD, then the entry-level model will offer only 64 GB storage space. It might also well be that Apple will wait for Q3 to get enough Core i3 chips, less powerful but also cheaper, than the ultra low voltage i5 version .
It is quite clear that such model could become a hit for students, right on time for the back to school season; but it could also compete with the iPad...