I have an i7 17" 2010 Macbook Pro with most of the additional features. However, it is a bit of a pain to travel with and I completely forgot to add applecare so it is now out of warranty which worries me. I have the opportunity to straight up trade it for a brand new sealed 13" 128 GB i5 Macbook Air. Is this a good deal?
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Should I trade my 17" 2010 MacBook Pro for a 2011 13" Macbook Air
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Depends on what's more important to you; power or portability. Since you don't say what you use your machine for, you'll have to *gasp* decide for yourself.
What area are you in? I have a 13" i7 Air, 4GB/256GB that I am trying to trade for an i7 17" MBP. I am in Sacramento, CA area. Mine is only 1 month old.
The new MBA are some beasts for their size! 
But again it is all about power and portability! Your 2010 17" can squeeze for sure some more power than any MBA. If you don't need that extra power aka not a gamer,photographer, videographer or anything that needs the extra power and you are a regular user with internet browsing, movie watching, music listening and some document processing or even programming MBA is more than enough for you! However especially for movie/documents I suggest getting an external monitor and connect it to your MBA when you need it. External HDD is needed as well, cause MBA SSD is definitely way smaller than your current MBP HDD and who can really live with just 128GBs anyway?
But again it is all about power and portability! Your 2010 17" can squeeze for sure some more power than any MBA. If you don't need that extra power aka not a gamer,photographer, videographer or anything that needs the extra power and you are a regular user with internet browsing, movie watching, music listening and some document processing or even programming MBA is more than enough for you! However especially for movie/documents I suggest getting an external monitor and connect it to your MBA when you need it. External HDD is needed as well, cause MBA SSD is definitely way smaller than your current MBP HDD and who can really live with just 128GBs anyway? 
I have had two 17" MacBook Pro's, and no way could I ever go back to a smaller screen. I have a nice sleeve I slip it in, and I can take it with me where ever I go with ease, if I choose to do so. There's no way I'd want to give up all that screen real estate.
I would never make that trade. If I had the 17" MacBook Pro that you mention here, I might look to get a new 13" Air IN ADDITION TO, but not in replacement of, your machine. You lose a great deal of performance in making that downgrade. Have you considered selling your 17" 2010 MacBook Pro and buying a 15" 2011 MacBook Pro? Even if discrete graphics isn't something you will ever use or care about, I'd still go with at the least a 13" MacBook Pro over a MacBook Air as you really do lose out on a lot of system features.
I did a similar switch (my 17" was a mid-2009 C2D model, so the difference in performance for you would be greater), and in terms of portability I have absolutely loved it.
I've found that losing the 17" screen has hurt my productivity a tad, since I can't have multiple documents open side by side and the such, but let's face it...so has MacRumors. Also, an external display when at my desk has alleviated this problem somewhat.
I would suggest that you push for an 1.8 i7 256GB model though, unless the i5 person is throwing in some cash.
Edit: Oh, and while I had the 17" I would fight people about how portable it is. Only after switching to the 13" has my perspective changed and I can see what others see...the 17" is a BEAST in terms of size. It eats 11" airs for breakfast, and the 13"s for lunch. I've also become more addicted to the small form factor, and may be switching to the 11" soon.
I've found that losing the 17" screen has hurt my productivity a tad, since I can't have multiple documents open side by side and the such, but let's face it...so has MacRumors. Also, an external display when at my desk has alleviated this problem somewhat.
I would suggest that you push for an 1.8 i7 256GB model though, unless the i5 person is throwing in some cash.
Edit: Oh, and while I had the 17" I would fight people about how portable it is. Only after switching to the 13" has my perspective changed and I can see what others see...the 17" is a BEAST in terms of size. It eats 11" airs for breakfast, and the 13"s for lunch. I've also become more addicted to the small form factor, and may be switching to the 11" soon.
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+1. There's such a great power different between the 17" MBP and the 13" MBA, despite the age of the tech. I think that Bubbleman's suggestions to look at the 15" MBP or check out getting an MBA in addition to the 17" makes a lot of sense.
I would only add that the MBA wouldn't have to be top of the line (or even this year's model) to serve as a backup to your 17" MBP.
I would do it in a heartbeat. I sold a 15in MBP to get a 13in MBA and couldnt be happier. The weight difference and solid state drive make it completely worth the decrease in processing specs. It basically comes down to what you're doing with it. If you are constantly editing heavy HD video and burning discs, the 17in pro is for you. If you're using your laptop like most people (notes, documents, web browsing, email, itunes, minimal video editing, etc) then you're not going to notice any difference in power. In fact the MBA may be faster for a lot of these uses, since the SSD reads/writes faster.
I might even suggest going with either a refurbished 13" Air over a new current 11". Similarly, if you (directed at the OP) keep the 17" Pro and want an ultraportable machine solely for word-processing/e-mail/internet, I'd probably spend money on an Asus Zenbook or one of those Samsung ultrabooks as if your needs are basic, you do get slightly more bang for the buck. Plus it's not like, with needs that basic, it really matters whether you're running Lion or Win 7.
