The 7-inch iPad Rumor is Back Thanks to Kindle Fire

Apple is reportedly feeling the heat emanating from Amazon's 7-inch Kindle Fire, and plans to launch its own 7-inch solution before the end of 2012.

As stated earlier today, Amazon may have reinvented the tablet industry with the launch of its 7-inch Android-based Kindle Fire. For $200, it packs quite a punch in content delivery and ease of use -- a punch that may already be felt by the fruity tablet giant itself, Apple.

Steve Jobs once said that Apple had no plans to sell an iPad at that size because iOS developers wouldn't want to create apps for a screen that small. He even indicated that the current crop of apps wouldn't run well on a 7-inch screen. Since then, the 7-inch and 9-inch iPad rumors remained dormant... that is, until the Kindle Fire crashed the scene with its incredible price point.

Amazon claims it's selling over a million Kindle units a week, and the Kindle Fire is at the forefront of those sales. That said, the iPad rumor beast has awakened, bringing new reports that Apple will likely launch a 7.85-inch iPad sometime before 4Q12 in addition to the iPad 3 which is slated for a 1Q12 release.

Honestly, the release schedule of the latter third-generation iPad offering is somewhat of a given based on the company's previous schedule. But a 7.85-inch tablet arriving during the iPod touch timeframe leads us to wonder if this will be more of an iPod product instead. Nevertheless, unnamed industry sources in the supply chain claim that Apple is feeling the heat from Amazon's Kindle Fire as well as super-sized smartphones from handset makers, thus pushing the company to resurrect its plans for a smaller tablet.

In the meantime, Apple is reportedly pressing for an iPad 3 1Q12 release in order to cash in on market demand as well as market expectations. As it stands now, global shipments of tablets are expected to reach 60 million units by the end of the month, 70-percent of which are iPad tablets.

Industry insiders are also reporting that Apple is actually purchasing 7.85-inch displays from LG, and will also purchase panels from AU Optronics (AUO). Makers in the supply chain expect to begin production of the 7.85-inch Apple tablet at the end of 2Q12... probably once the bulk of the initial iPad 3 shipments are out the door and into the hands of retailers.

The question is, however, how Apple will trim cost from its iPad and whether the decline in component cost has been enough to enable Apple to cut the price of the regular iPad minus a few features to $200.

Cutting features is problematic as Apple could be endangering its platform experience and if it touches core features, the value proposition of the App Store and the device itself is affected. Rumors coming out of Taiwan suggest that Apple will be launching an 8-inch device with a 7.85-inch screen before Q4 of next year. The Digitimes report strongly contradicts Steve Jobs conclusion that a tablet needs to have a 10-inch screen to be useful, but the market may have changed and if Apple can keep at least a screen resolution of the current iPad (to support current apps) in a smaller device, it could be worth a thought.