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With the iPad, Apple single-handedly created today's multi-billion dollar tablet market, and continues to be its most dominant player.

But that doesn't mean that Apple is the only company cashing in on the devices that have changed the face of computing. If you want a new iPad, you'll need to shell out $499 -- a price too steep for many consumers.

That has created opportunity for companies like Amazon, Barnes & Noble and Google, all of which have tablet devices designed for consumers looking to spend less on a slate.

But companies capitalizing on the lower end of the tablet market shouldn't get too comfortable. Rumors have persisted that Apple is working on a cheaper, smaller tablet of its own and now Bloomberg is reporting that a 7 to-8-inch iPad may be a reality come October.

According to Bloomberg's sources, the new tablet won't feature the Retina display sported by the latest iPad. Instead, it will have a less sophisticated display supporting the resolution of the iPad 2, Bloomberg's sources say, a strong hint that Apple would be looking to be within striking range of the price of devices like Google's recently-announced Nexus 7 tablet, which costs $199.

If Bloomberg's sources are right, Google et. al. would have good reason to worry. Sterne Agee & Leach Inc. analyst Shaw Wu believes that Apple would be able to maintain its margins on a 7-inch iPad, and he points out that even if Apple's smaller iPad is slightly more expensive than other 7-inch tablets, it may not make much of a difference to consumers. Thanks to its strong retail presence and the depth of its application ecosystem, Apple probably wouldn't have to hit the $199 price point to shake up the lower end of the tablet market.

The big question, of course, is whether Apple should. As Bloomberg's Peter Burrows and Adam Satariano observe, Steve Jobs wasn't a fan of smaller tablets. The iPad, at 9.7 inches, was as small as one could go while providing for a quality experience he believed.

Will Tim Cook's Apple prove Steve Jobs wrong? Time will tell. But one thing is for sure: in trying to do so, Apple would almost certainly make lots and lots of money.

Patricio Robles

Published 4 July, 2012 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

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