Seven | TechCrunch

Excerpt from some thoughtful iPad form-factor analysis; I won't be surprised if Apple releases a smaller (size and cost) iPad and initially promotes it for K-12 education (where, e.g., budgets and fingers tend to be smaller)

"The fact of the matter is that the iPad is great at many things and the list is constantly expanding. But it’s not great for holding up for prolonged periods of time in certain settings. This is problematic for say, reading in bed. It’s not that it’s too heavy, it’s not. But the large size does make it a bit clunky at times. A 7 inch iPad would be perfect in many of those situations.
Of course, that alone would not be enough for Apple to do the smaller iPad. But like the iPod mini (and nano), Apple understands the mentality that smaller is often better in the eyes of many. The mini and nano eventually became far more popular than the original iPod. (Some) options are important. None more so than pricing options.
The Kindle Fire has a 7-inch screen. It’s $199. By most accounts, it’s pretty poor when compared to the iPad. But that isn’t stopping millions of people from buying them. $199 to $499 (the entry-level new iPad) is a big jump. Even $199 to $399 (the iPad 2′s new price) is a big jump. If Apple can sell the iPad 2 at $399 with a healthy margin, imagine what they could do with a smaller-screen iPad? I wouldn’t rule out $299."

Seven | TechCrunch