Edible Apple

Digitimes last week reported that Apple is prepping a 7.85-inch iPad model for release in August of this year.

Building on that, and adding even more credibility to a product that John Gruber has heard Apple is, in fact, already tinkering with in its labs, iMore recently reported that a smaller iPad model is in play and that Apple is aiming to release the device sometime in October in the $200-$250 price range.

According to our source, which has proven reliable in the past, the reason for such aggressive pricing is to do to the tablet market what Apple did to the MP3 market in 2004 with the expansion of the iPod product line — leave absolutely no space for competitors.

A brilliant strategy, no doubt.

Competitors, from Samsung to Amazon and everyone in between, have been absolutely unable to compete with the iPad and garner any significant marketshare of their own. As a result, tablet competitors began trying to target Apple on price, with the most successful offering to date being the Kindle Fire from Amazon. The Fire has seemingly sold well, but recent research reports have claimed that sales have cooled. Overall, it’s hard to know just what’s going on with the Kindle Fire since Amazon remains hesitant to release specific sales figures – a fact which Steve Jobs previously interpreted as an indication that sales probably aren’t too hot. What’s more, Amazon reportedly loses money with each Kindle Fire it sells and hopes to recoup that loss via sales of Amazon Prime.

But if Apple does in fact come to market with a mini iPad in the ~$200 price range, all iPad competitors will effectively be squeezed out of the market. And it’s not as if a company like Amazon can afford to lower the price point from the Kindle Fire much lower. But with Apple’s expertise in supply chain management and getting favorable deals on component costs, Apple is uniquely positioned to tackle the low end of the tablet market and prevent any one else from owning any piece of the pie.

Again, this is exactly what Apple did when the iPod reigned supreme back in the day. What was originally a premium product that ran a few hundred dollars soon became a product line unto itself with varying models that occupied numerous points along the pricing spectrum.

With the tablet market, by all accounts, set to explode in the next few years, it looks like lighting may strike twice for Apple.