Apple are apparently planning to release a smaller and cheaper version of the iPad in order to compete with Amazon's Kindle Fire and Google's Nexus 7 tablet. The new version is expected to be announced in October, along with a new iPhone, and will be released in time for Christmas. If it does go ahead, the mini iPad will have a screen size of 7 or 8 inches diagonally and is unlikely to have the "retina display" of the larger version, in order to keep the price down.
According to an analyst from Sterne Agee and Leach, if Apple were to do this is would be "the competitors’ worst nightmare," adding "The ball is in Apple’s court." The chances that they actual will release an iPad mini are very high as well, as despite the original iPad's tremendous success, the tablet market is still seen as open to new ideas and new players, with an expected growth of $66.4 billion this year. Apple currently hold 61% of the market.