Speculation that Apple might release a smaller version of their category-dominating iPad has been swirling for years. After all, nearly every one of Apple’s competitors have released sub-10″ models and while they haven’t achieved anywhere near the iPad’s success, they have been selling. The belief was that Apple would want to address the emerging threat from Amazon and Barnes & Noble, both of whom released $200 7-inch tablets last year. New, lower pricing on the BlackBerry PlayBook was giving RIM’s embattled tablet some new life too.

But two factors argued against an iPad-mini: First, Apple CEO Tim Cook revealed that the Amazon/B&N products hadn’t dampened people’s enthusiasm for the iPad at all – a fact that was illustrated by the very strong opening sales numbers for the new 3rd generation iPad. Second, when Steve Jobs was reporting on the success of the original iPad, he claimed that the new crop of 7″ tablets would be “dead on arrival.”  He hated them: ““7-inch tablets are tweeners: too big to compete with a smartphone and too small to compete with the iPad.” Apple had spent a lot of R&D on coming up with the size and shape of both the iPad and the iPhone, and there was a growing sense that the company wasn’t going to abandon those formulas in favour of a me-too strategy.

Things, however, inevitably change.

Steve Jobs, the man who was known as much for his stubbornness as for his visionary role in the industry, is now silent and any influence he still wields at Apple is mostly cultural in nature. For the next few years, it’s a good bet that Apple will follow the course he laid out. But he can no longer shout-down ideas he doesn’t like and that means Apple is a different company when it comes to new product development.

While Tim Cook and his management team continue to adjust to an Apple sans-Steve, they must also grapple with another situation: despite Apple integrating iBooks into iOS and even developing an authoring platform for publishers to create rich and dynamic textbooks for the iPad, iBooks has so far failed to become Apple’s next iTunes.

This has got to be a sore point for the company. With very few exceptions, most notably their anaemic Ping social network built into iTunes, Apple’s product offerings tend to do very well with consumers. So why has iBooks foundered? A simple explanation would be that Amazon and B&N (and Kobo here in Canada) are too strong, too entrenched and too good at e-books. Apple has always succeeded by bringing something new to the game, or finding a simplification to a process or gadget that was overly complex (even when others didn’t realize how complex they were). But Amazon’s e-book experience is nearly perfect from the point of view of selection, simplicity and price.

That’s one explanation. The other possibility is that the iPad, iPhone and iPod Touch, for all their magic when it comes to creating mobile experiences that people love, are second-rate e-book reading devices. Even with its extraordinary Retina display, the new iPad is too big, too heavy and much like every other tablet, is backlit – which increases eye-strain for many users. If you were to take a poll amongst people who own both an iPad and an e-ink reader like the Kindle, and ask them which they prefer for reading books, I suspect the answer would be the Kindle – and overwhelmingly so. I’m one of those people and I only reach for my iPad or iPhone when my Kindle isn’t handy.

Which brings us back to why rumours of an iPad mini simply won’t die. When you take the e-books landscape into consideration and then throw in this week’s revelation that Apple has placed a large order for 7.85″ touch-screens, suddenly the speculation becomes plausible. When you further consider that the loudest voice at Apple in opposition to a small tablet is no longer calling the shots, an iPad mini starts to sound like certainty – with only the launch date remaining to be debated.

Obviously no one can confirm that an iPad mini is coming. Nonetheless, here are some observations on what such a product could feature:

• Roughly 7″ Retina display. The retina-level pixel density is key, especially if Apple hopes to make a bigger dent in e-reading.
• Front and rear cameras, but with specs to match the new iPad, not the iPhone 4S.
• 4G LTE as the cellular option.
• Between 6 and 14 oz (168 and 392 grams): the lower amount is the weight of Amazon’s Kindle, whereas the higher amount is the Kindle Fire. It’s probably unrealistic for an LCD-based tablet to ever come in at 6 oz, but Apple should definitely aim to beat the Fire which by all accounts is a twin to RIM’s PlayBook.
• Thin design – with a smaller screen, the battery can be shrunk as well. It may only lose a few millimetres but it will be the thinnest iPad yet.
• A5 processor from the iPad 2. Keeping an iPad mini as cheap to build as possible will critical for Apple if they’re going up against $200 tablets. The newer A5X chip from the new iPad would offer better graphics performance, but unless the Retina display on the mini requires it, it’s not a must-have.
• Starting price: The new iPad is $519, the iPad 2 is $419. So the logical price for an iPad mini is $319 (all prices in $US for simplicity). That’s still way more than a Kindle Fire, but it would be the cheapest iPad to-date. And though it would likely squeeze Apple’s margins to a new low, if the device succeeds in kicking Apple’s iBooks into high gear, they could easily justify the price.

You’ll notice that I’ve omitted any new technology from the specs list. That’s because I don’t think Apple has to offer anything new in order for an iPad mini to be a roaring success. The current feature set of new iPad isn’t the best in the tablet world (still no SD card slots or USB ports, no HDMI out, no replaceable batteries, no quad-core CPU). Doesn’t matter. Even without these features, the iPad outsells the tablets that have them by a ridiculous amount. An iPad mini doesn’t need them either.

An iPad mini really only needs to do one thing: Give everyone who was thinking of buying a Kindle, Kindle Fire, Nook or PlayBook (or any other 7″ tablet) a reason to stop, take a deep breath, and then buy Apple’s product instead.

There’s only one possible down-side for Apple: cannibalization of iPad sales. A worst-case scenario for Apple would be if all (or many) prospective iPad buyers decided to buy minis instead. Going from a high-margin model to a lower-margin model would hurt the company a lot. But if Tim Cook was correct (that Kindle Fires an the other small/cheap tablets haven’t hurt iPad sales), and if an iPad mini successfully attracts people who would have otherwise bought those devices, Apple could expand their reach significantly rather than water it down. There was some speculation that when Apple launched the Mac Mini it would have a chilling effect on sales of iMacs. After all, why buy an expensive all-in-one when you could have the same computer running on the monitor and keyboard/mouse you already own? It never happened. Sales of both Mac Minis and iMacs grew after the Mac Mini launched.

So Sync reader, what do you think of a smaller, cheaper iPad? Is it just the tablet you’ve been waiting for, or simply another i-device that you’ll take a pass on?