Apple launches its lowest priced MacBook. Why it’s such a big deal.

The tech giant introduced its latest device on Wednesday as the week of product announcements continues. The MacBook Neo, the company’s new laptop, is offered in four colors, including silver, a light pink, yellow, and blue.

The most notable part of this launch is the price. The MacBook Neo comes with Apple’s A18 Pro chip and starts at $599. That’s significantly less than the $1,099 starting price for the new MacBook Air with the M5 chip, the $2,199 starting price of the MacBook Pro with the M5 Pro chip, and the $3,599 starting price of the MacBook Pro with the M5 Max.

That’s also cheaper than the iPhone 17, which starts at $799.

“We’re incredibly excited to introduce MacBook Neo, which delivers the magic of the Mac at a breakthrough price,” John Ternus, Apple’s senior vice president of Hardware Engineering, said in the news release.

The Neo starts at $499 for education. That’s slightly higher than the Chromebooks that Alphabet’s Google offers for education. While this could give Apple an opportunity to compete in the market for schools, it’s a device that college students are likely to find very attractive.

The MacBook Neo costs less because its specs are less impressive than other Apple laptops. Not only is it run on an A18 Pro chip and not an M5, it has 8GB of memory and 256GB of storage. The MacBook Air starts with 16GB of memory and 512GB of storage, while the Pro starts with 16GB of memory and 1TB of storage.

The Neo also has a less powerful CPU and GPU than the Air and Pro.

However, the new MacBook gives Apple the ability to bring in more budget conscious shoppers. That’s especially notable now, as fellow computer makers are raising prices to offset the rising cost of memory.

Demand for memory is outpacing supply due to the need to power artificial intelligence. Personal device maker HP Inc. said when reporting first-quarter financials in February that it expects earnings for the fiscal year to be at the lower end of guidance because of higher costs. Price increases are one way the company is combating this headwind. Dell Technologies gave a better-than-expected financial outlook in February, but has also raised its prices.

The launch of a lower priced device also introduces the risk of trade down, meaning consumers that were possibly willing to purchase a more expensive MacBook might now choose to buy the cheaper one. But as prices for other laptops rise and the cost of living stays high, Apple might incentivize more shoppers through the introduction of this product than it would have before.

Write to Angela Palumbo at angela.palumbo@dowjones.com