iPad Mini more likely than not

Despite Steve Jobs' well-known dislike of smaller form factor tablets, current reports and speculation make the release of the “iPad Mini” close to a sure thing.

World Wide Worx MD Arthur Goldstuck says there is greater likelihood of Apple releasing a seven-inch iPad than of it not doing so. “The Kindle Fire made the first serious and real dent in Apple's American market share, and that is where it responds most aggressively.”

Goldstuck says a Google Nexus 7 tablet, at $199, will very quickly push Apple's share of the tablet market to below the 50%. “That would be a severe blow to the corporate ego. It would be hugely surprising if there is no answer to that challenge.”

While analysts such as Shaw Wu from Sterne Agee & Leach have said an iPad Mini would be “the competition's worst nightmare” and that the ball is sitting firmly in Apple's court, Goldstuck says it's the Kindle Fire and Nexus that pose a threat to Apple rather than the other way around.

“An Apple seven-inch tablet would be retaliation rather than a threat as such. Between a Google and Apple seven-inch device, however, the seven-inch form factor would be set alight and make several leaps forward.”

At the same time, there is an argument that an iPad Mini would create a new category, separate from seven- and 10-inch tablets. According to reports, sources say the iPad Mini will have a display of 7.85 inches, and is likely to not have the retina display of the new iPad, in order to keep costs down.

In an article for Forbes, Eric Lai says it is also likely that Apple will use older components for the iPad Mini in order to match the Google Nexus on price. Lai predicts the smaller tablet to start at $249 for the 16GB model (as opposed to $199 for 8GB as is the case with the Google Nexus).

“In this way, Apple is copying what it's done successfully with the iPhone in the last two years: sell what are essentially older versions to the price-sensitive mass market and avoid cannibalising its high-end, while stealing away users from Android.”

According to Goldstuck, the market will, however, be expecting at least a retina display from an iPad Mini. “From Google, the likes of extendable storage, multiple ports and any number of options to avoid the walled garden feeling of the iOS environment.”

For both Google and Apple, Goldstuck says discounts and free vouchers for paid apps would also sweeten the deal for consumers. “A revved-up version of their cloud offerings - more capacity, lower cost, better integration, fewer restrictions, wider geographic availability - would also be a powerful incentive.”