The catch: Whereas the $1299 model features a quad-core, 2.7GHz, Intel Core i5 CPU (Turbo Boost to 3.2GHz.), the $1099 model sports a dual-core, 1.4GHz., i5 CPU (Turbo Boost to 2.7GHz.). It also has a smaller hard drive (500GB vs. 1TB), and less powerful integrated graphics (Intel HD 5000 vs. Iris Pro).
In April, Apple launched MacBook Airs that (in addition to having slightly faster CPUs) were $100 cheaper than comparable prior-gen units. The entry-level Air now goes for $899.
Apple's Mac revenue was up 1% Y/Y in FQ2 on the back of 5% unit growth. Mac ASP was $1339 - far above the PC industry average.