The tech companies are at it again trying to catch the blockbuster iPad in a race to win the tablet market.
Google recently began shipping its Nexus 7, which is smaller and less expensive than Apples iPad, and is meant to compete with both that device and Amazons Kindle Fire.
This summer, Microsoft announced that it would create its own tablet, Surface. Analysts also believe that Amazon is updating the Kindle Fire. Drew Herdner, an Amazon spokesman, declined to comment.
But Apple is hardly about to cede ground.
The company is reportedly developing a new tablet with a 7.85-inch screen that is likely to sell for significantly less than the latest $499 iPad, with its 9.7-inch display. The product is expected to be announced this year.
Natalie Kerris, an Apple spokeswoman, declined to comment.
Apples plan for a tablet with a smaller screen is part of a textbook business strategy, to lure customers who want different sizes of tablets into the iPad product family, say analysts and technology industry executives.
The strategy would most likely include devices with different prices and functions tailored to various uses, they say. The idea is to help Apple solidify its dominance in the tablet market even as the richest companies in the tech business are trying to figure out how to outflank Apple.
Leslie Grandy, a former Apple manager who is now a consultant and an adviser to startup companies, says a smaller iPad could be especially appealing to people who do not now carry their iPads with them because they are too large and heavy. While a 7-inch device is too big for pants pockets, Grandy said, it is a good size for womens purses.
I really do feel like this is the sweet spot for them, Grandy said. The company used a similar strategy throughout the 2000s to fend off rivals that were determined to kill the iPod, Apples digital music player, with their own products. The company fiddled with the design of the product so much that it ended up running the gamut from the $49 iPod shuffle, a screen-free iPod so small it could be clipped to the collar of a runners shirt, to the $249 iPod classic, a heavier device with space for 40,000 songs.
The strategy was a great success, helping Apple to create a near monopoly in the MP3 music player business. The company held 80 percent of the U.S. market for the first five months of the year, according to the NPD Group.
Apples share of the tablet market is only somewhat less impressive: 60 to 70 percent of the market, depending on the company doing the estimating. As many people in the tech industry have pointed out, the tablet market is really a misnomer. For the time being, it is an iPad market.
The companys iPod strategy contrasts with how it handled competition in the phone market; smartphones running Googles Android operating system have elbowed their way past the iPhone in market share.The most credible challenge right now to the iPad appears to be Googles Nexus 7, an Android device that costs $199 and is of the companys own design. With a 7-inch screen, the Nexus 7 has already won enthusiastic reviews for its software and battery life and, of course, its size and price.
In addition to creating the Surface, which could go on sale as early as the fall, Microsoft has also agreed to invest up to $605 million in Barnes & Nobles Nook business. The move helps bolster another Apple rival in the tablet market, one that could end up using Microsofts software for its products.
Horace Dediu, a blogger and independent analyst, thinks Apple is interested in a 7-inch tablet because lighter, smaller devices are better suited, in many situations, to media, especially books. For activities like typing email, Dediu said, the larger iPad would probably have an edge.
To emphasize the new devices media-playing functions, Dediu suggested, Apple could even position it as a next-generation version of the iPod Touch, rather than as an iPad mini, as bloggers have called the product.
What I think is happening in the post-PC world is were breaking the jobs PCs were hired to do into device-centric solutions, he said. This is why its not enough to look at tablets as one category.
Stephen Baker, an analyst at NPD, said a smaller tablet could help Apple hold on to a majority of the tablet market by widening the audience for the device. One factor in Apples favor is that most tablets customers are not buying the devices through wireless carriers. The aggressive efforts of carriers to sell Android smartphones have been critical for the sales of those products, analysts say.
Even if the company does lose some share of the business, Apple has still demonstrated a knack for holding onto a disproportionate piece of the profits of markets like that for smartphones. Once they get above 50 percent, its almost impossible, unless they totally screw up, to dislodge them, Baker said.