The report comes via officials at some of Apple's suppliers, who asked to remain anonymous. They said that Apple has shown them screen designs for a new device with a screen size of about 8-inches that would have a screen with similar resolution to the iPad 2. They added that the Cupertino-based company is qualifying suppliers for the smaller tablet.
Of course, at the stage the device is at, Apple could easily opt to halt development of it.
The news comes as Apple prepares to launch the iPad 3, a device that many believe will ship with a form factor similar to the iPad 2, but with a screen resolution twice that of the current version.
Smaller, cheaper Android tablets such as the Kindle Fire have shown that smaller screens are not a hindrance to sales. In fact, some prefer the smaller size as it makes the tablet easier to hold with one hand.
While the iPad represented more than 61.5 percent of world-wide tablet shipments in Q3 2011, thatw was down from 68.3 percent in the second quarter, according to market researcher IDC, showing that Android tablets are continuing to slowly erode its market share.
To be clear, we believe that despite Steve Jobs' comments to the contrary, Apple has experimented with varying screen sizes for some time and will continue to do so. This new device is most certainly not the iPad 3, but rather something Apple is considering to bring to market.
Eventually, Apple will bring a smaller-sized tablet to market, but we believe it won't be the iPad 3, which Apple seems committed to shipping with a retina display of 2,048 x 1,536 resolution.
That device already has its specs set; this new form factor would be something for the future --- if ever.