With the growing demand for smaller tablets, the rumor-mill (which already was in effect) that Apple might want to get in on the action is churning. While the firm could capitalize on this space, it doesn’t seem likely (due to what could be termed as ‘indirect-cannibalizing’). In other words, why would the firm detract from a market that they already dominant? Granted, in all likelihood, Apple producing a smaller tablet might be analogous to when they produced their iPod Touch but as a ‘media consumption device’ the iPad still has no rival (so why dilute it?)
(Source) PC World: http://goo.gl/0a1BE