Everyone and their dog knows that an iPad 3, possibly with a high-DPI display, is due out early next year; but did you know that the rumor mill in Taiwan is predicting a second, smaller device? According to DigiTimes, Apple will introduce an iPad with a 7.85" display some time in the fourth quarter of next year. Production is reportedly scheduled to start in the second quarter.
DigiTimes got word about the device from its sources in the supply chain, and it claims Apple "has been persuaded" to develop the 7.85" iPad in response to Amazon's Kindle Fire. The Kindle Fire has a 7" display and is currently priced at $199, considerably cheaper than the $499 iPad 2. IHS expects the Kindle Fire's low price to catapult it right behind the iPad 2 as the second-most-popular tablet this quarter.
The report sounds reasonably plausible, but a 7.85" iPad sounds decidedly un-Apple to me. Such a product would mean fragmenting the iOS ecosystem, forcing app developers to adapt their software for three different display resolutions—3.5" for the iPhone and iPod touch, 7.85" for the baby iPad, and 9.7" for the regular iPad. On top of that, Apple isn't exactly known for low-margin, ultra-cheap devices, so competing with the Kindle Fire at $199 seems somehow unlikely, considering Amazon is said to be selling that device at a loss right now.