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Cutting the entry-level MacBook Air doesn’t raise the price, it raises the entry-level price. Crucial difference.

The MBA line will simply start at 16/512/$1199. Same price as before for the same spec tier. This is not a price increase.
You are right, it raises the entry-level price and repositions the Air line. What I mean by raising price is that, in fact, it raises the price for someone who is tempted in the low-entry Air and is not currently that interested in the middle model (specially that now the base model has 16 GB RAM). The new MacBook will probably have nice features, but probably be under specced compared to the current base Air (probably like 8-12GB RAM and 128GB SSD) so it will now tempt the same customer to fork just a little more money for the middle Air model. So the current base Air customer who would have been well served by the base Air will be pushed to the middle model. Sure, some customers will just buy the new model too. But the Air will become a higher end machine than it actually is. The new entre model will surely have better margins than the current base Air, and let's not forget pricing will go up in a year or two helping on that front.

We could also be surprised and see Apple launching a comparable MacBook model with 16GB RAM and 256GB SSD as an entry model, but I have a hunch it will probably not be the case. Hope I'm wrong though.
 
Yeah, a MacBook that is stuck with 8GB RAM and a last-gen tablet/phone CPU and a tiny amount of SSD. That's what you call "good hardware"?

I picked up an Asus ZenBook S 16 with a 16" 3K 120Hz OLED and 24GB RAM/1TB SSD and as thin and light as anything for $625. I'd rather spend on something like that than a dead-end MacBook model.
So, you got a computer that retails before discount at about $1,500 for $625?
 
You are right, it raises the entry-level price and repositions the Air line. What I mean by raising price is that, in fact, it raises the price for someone who is tempted in the low-entry Air and is not currently that interested in the middle model (specially that now the base model has 16 GB RAM). The new MacBook will probably have nice features, but probably be under specced compared to the current base Air (probably like 8-12GB RAM and 128GB SSD) so it will now tempt the same customer to fork just a little more money for the middle Air model. So the current base Air customer who would have been well served by the base Air will be pushed to the middle model. Sure, some customers will just buy the new model too. But the Air will become a higher end machine than it actually is. The new entre model will surely have better margins than the current base Air, and let's not forget pricing will go up in a year or two helping on that front.
This is all true, but don't weep for the TINY group that will be pushed upmarket. That group is people who insist on the power of an M5 over an A18, AND can make do with a 256GB drive. There are certainly some such people (massively over-represented on this forum), but they have no buying power as a market segment. They have three choices: go down to the A18 to stick with 256, go up to 512 to stick with an M-series, or leave the platform. Tim is fine with any of these choices.

We could also be surprised and see Apple launching a comparable MacBook model with 16GB RAM and 256GB SSD as an entry model, but I have a hunch it will probably not be the case. Hope I'm wrong though.
Such a model is exactly what I am predicting.

A18 Pro MacBook 16/256 $799
A18 Pro MacBook 16/512 $999
M5 MacBook Air 16/512 $1199
 
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A18pro: 3539 single core, 8772 multi-core
M2 (first version): 2599 single, 9644 multi-core

What would be the right price for the performance, not the name?
If we’re pricing strictly by Geekbench, we’re ignoring a lot of other factors that distinguish them: thermals, sustained performance, memory bandwidth, I/O, and power draw. The M2 can sustain heavy multi-core loads, while the A18 Pro is optimized for burst performance in a tiny thermal envelope.
I think at $800+ an iPad with a keyboard folio starts to look much more attractive.
 
Yeah, a MacBook that is stuck with 8GB RAM and a last-gen tablet/phone CPU and a tiny amount of SSD. That's what you call "good hardware"?
For the anticipated price, yes. It’ll run rings around any similarly priced non-junk Windows laptop and last 2-3x as long unplugged.

I picked up an Asus ZenBook S 16 with a 16" 3K 120Hz OLED and 24GB RAM/1TB SSD and as thin and light as anything for $625. I'd rather spend on something like that than a dead-end MacBook model.

And so you got a rare deal on a machine that retails for more than double what this MacBook is expected to cost. Doesn’t change the quality or value of this MacBook for everyone else.

By the way, that RAM? You do understand that for a similar experience/practical result (performance, etc.), at the low end, Windows typically needs about double the RAM as a Mac, right?

But bragging rights… right?
 
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