“According to Rene Ritchie from iMore, Apple is working on a 7 inch version of the IPad to be launched in October during the presentation of the new iPhone,” Andrés Cardenal writes for The Motley Fool. “The most interesting part of the rumor is that the product is said to be priced in the $200 to $250 price range. That would be a very smart move from Apple, and it could deliver a nasty punch in the mouth to competitors like Amazon, Samsung, and Research in Motion.”

Cardenal writes, “There is one main reason why someone would buy a tablet from another company instead of an iPad: pricing. Products like Kindle Fire sell at $200 and that´s a big difference versus $500 for the cheapest new iPad model.”

MacDailyNews Take: The most inexpensive iPad is the iPad 2 for $399 and it’s already killing the Kindle Fire. See: Why have Amazon’s tiny screen Kindle Fire shipments dropped off a cliff? – May 9, 2012

Cardenal writes, “If this rumor is confirmed, and Ritchie has been spot on with Apple related rumors in the past, Apple could destroy Kindle with this new version of iPad. From a business point of view, the best reason for Apple to do such a thing would be asphyxiating the competition, at least in the short term.”

“The new product could have a negative impact on Apple´s margins, cannibalizing sales of the existing iPad models and also probably hurting sales of iPod Touch. The decision would probably be polemic among financial analysts,” Cardenal writes. “But Apple is not the kind of company that worries too much about such things like cannibalization; Steve Jobs has always been focused on developing the best products and allowing the process of creative destruction to follow its own course, even among Apple´s own products. It looks like the cultural legacy of Jobs is alive and healthy in Tim Cook and the rest of the management team.”

Read more in the full article here.

Related article:
7.85-inch iPad on track for October 2012 release; to cost $199-$249, says source – May 10, 2012