"Tablets are replacing PCs for a lot of people, and like success in the PC market, tablet makers need several product families," said Alexander. The addition of an 8-in. iPad would give Apple a "richer product family," she added.
iSuppli believes that Apple will move on an 8-in. iPad in time for the 2012 holiday sales season, a period that brought the company huge success in 2011, when it sold a record 15.4 million iPads, 111% more than the same quarter the year before.
The research firm -- which regularly estimates the BOM, or bill of materials, of future or current electronics products -- has not yet settled on cost projections for a smaller iPad, said Alexander, because the tablet is "vaporware." Instead, it's modeling several possible configurations.
"I'd be surprised if [an 8-in. iPad] came in the same number of models as the [larger] iPad does now," Alexander said. Instead, she would expect Apple to settle on one or two entry-level, lower-priced models, if only to contrast them to the full-sized iPad.
Apple did the same in 2010 when it revamped the MacBook Air line, offering a new lower-priced 11-in. model that is consistently outsold by the larger, more-expensive 13-in. configuration when customers start comparing the two, then end "buying up."
One possibility: An 8-in. iPad with just 8GB of storage space, or half the amount in the lowest-priced iPad 2, that comes in both Wi-Fi and 3G flavors.
Like other analysts, Alexander is betting that Apple will keep the iPad 2 in its tablet line-up after launching the iPad 3, as most have called the next model, and will cut the price of the older device, as it did the iPhone 4 last year after introducing the iPhone 4S. A $100 price cut, which would start the iPad at $399, is more than doable, she said.
"As we move out into 2012, the pricing of the iPad has got a lot of wiggle room," Alexander said. "They can knock it down by $100, but actually they have the room [in the cost-to-build] to knock the iPad 2 down more than that."
She dismissed concerns by some that adding a smaller iPad to Apple's offerings would force developers to support another screen resolution -- an 8-in. would sport the same format of 1,024-by-768 pixels as the current iPad, she said.
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