With Google recently unveiling their 7-inch tablet, the Google Nexus 7, one would have to wonder what the competition will bring to the table. In the past, there have been a lot of rumours doing the rounds which claim that Apple will enter the 7-inch tablet segment to battle competition from the Amazon Kindle Fire and more recently to address the threat posed by the Google Nexus 7. Fuelling these rumours, an analyst with Pacific Crest, Andy Hargreaves, notes that Apple will launch a 7.85-inch tablet  by October this year and it is expected to come with a price tag of $299, a report by CNET states.

According to the report, the analyst states, “We anticipate an entry-level 7.85-inch iPad with 8GB of NAND capacity to price at $299 with an initial gross margin of 31%. We estimate Apple will sell 10.0 million 7.85-inch iPads in FQ1 (Dec. 2012) and 35.2 million in all of F2013. Based on estimated component order volume, we believe our iPad mini unit estimates are well within Apple's production capacity. We anticipate 25% cannibalization of the larger 9.7-inch iPad (for every four 7.85″ iPads added, we reduced our 9.7″ iPad estimate by one), so our total F2013 iPad estimate increases to 91.6 million from 65.2 million.”

Is it going to become a reality?

Can we expect an October launch?

The report goes on to state that prior to the unveiling of the Google Nexus 7, Tom Mainelli, IDC's research director of Mobile Connected Devices is of the impression that Apple could increase its dominance of the tablet market if they do launch an iPad mini. He stated, “If Apple launches a sub-$300, 7-inch product into the market later this year as rumored, we expect the company's grip on this market to become even stronger.”

It may be really interesting if Apple does launch an iPad with a lower budget as the brand has lost a significant amount of market share to 7-inch tablets, the main one of these is the Amazon Kindle Fire which has eaten quite a bit of Apple’s share in the tablet market in comparison to other tablets. However, former Apple CEO, Steve Jobs had always been against a smaller-sized tablet as he believed that only the 9.7-inch form factor was the way to go.

An interesting thing is that Apple has never succumbed to competition by launching products with lower prices. The brand faced stiff competition when netbooks running Windows were launched cannibalizing Apple’s computer sales. However, they did not concede and instead unveiled the MacBook Air, which is still quite costly in comparison to netbooks. On the other hand, to tackle the competition they unveiled a new product altogether which is the iPad.

If Apple does introduce a smaller iPad in October, the unveiling would coincide with the debut of the next iPhone, a smartphone which is expected to feature a drastic change in appearance as compared to the iPhone 4 and iPhone 4S.

Let us know your thoughts on Apple possibly releasing a 7.85-inch tablet in the comments below.

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