Apple entered a totally different market, for those on the go, on planes a lot of the time, general browsers and not needing a optical drive, many ports etc... the wireless world.
The MacBook Air was designed to be a compliment product for the iMac and other products, not to replace the MacBook line or other Macs.
My thoughts were the same as you when I first heard about it, but when you consider the technology in it (Which I assume they'll be putting into the other MacBooks soon) it's a good laptop.
So, it's built for the ultraportable market and not those looking to use it to edit movies, use as a home computer or media center.
It will appeal to many different people mate. Don't like it, don't buy it.
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