Maybe some... but they're likely picking up a lot of people that would have gone with a $500-700 windows laptop instead.. and the margins are similar, so they're probably well ahead.

intentionally cannibalizing their own sales is iirc the official apple policy: iphone destroyed ipod and was one of the best business mives of all time

If they can use this product to lock more people into their ecosystem it'll work. As a lifelong windows/android user, I've been eyeing up the neo.

Also, the Neo is just cheap enough that it's a product I'd consider buying that I don't need. I'm not in the market for a new laptop and certainly not an Air. So I'm a demographic considering this product that is not going to cannibalize their existing sales. There's gotta be at least a dozen people like me!