While the pricing rivalry between the Kindle Fire and Nook Tablet drummed up interest in the 7-inch tablet category and the performance of the Nexus 7 advanced it, Apple -- due in part to the iPad's global presence versus these competitors -- has remained high atop the tablet market. Indeed, Amazon's success in the color tablet market stems not only from the product's low price relative to most other tablets regardless of screen size, but also its staking out of a market segment that Apple seemed reluctant to pursue.
Apple's introduction of an "iPad mini" would turn up the heat on the Kindle Fire but Amazon could still likely beat Apple on price. The tougher challenge for the online retailer will be taking Apple on in the larger screen sizes where few companies have scratched the retinal surface of the iPad's volume. Here, too, Amazon will likely undercut Apple, but that strategy has not been very effective for a host of Android-based competitors, and it became an even more challenging task when Apple kept the iPad 2 in the market at $399. Not only that, but those tablets have had full access to Android Market and its successor Google Play, which includes a far greater selection of apps than Amazon's Appstore for Android.
But, as is well-understood these days, this battleground would not be among four devices but rather (at least) two ecosystems -- one driven by Apple's mature app library, another by Amazon's content and services anchored in Amazon Prime. Amazon's recent delivery of its Instant Video app for the iPad mitigates some of the Kindle Fire's advantage in a large screen size, but helps to prime the pump for what the company can do in a larger-format color Kindle Fire focused on content consumption and it would help keep the tablet atop Android-based competitors. In addition, a larger format Kindle Fire could have appeal to Amazon's avid reader customer base looking for a better platform on which to view magazines.
Apple, on the other hand, would be sure to use compatibility with tens of thousands of optimized iPad apps running on its newly minted iOS 6 to differentiate a smaller iPad from a host of other smaller tablets. It would also create an opportunity to deliver the iPad experience at a lower price. Such a product could also offer a richer alternative to the iPod touch, which has lost some of its appeal versus the iPhone as Apple's smartphone has proliferated to many more carriers since its days of AT&T exclusivity.
The releases would mark the last salvos from the market leader and an aggressive niche-carver before the onslaught of competition from Windows 8, which seeks to redefine the tablet experience by gluing it on to the full PC capabilities of a desktop environment. They will also put more pressure on other Android tablets which, despite the success that Google has seen taking a page from the Kindle Fire's e-book, continue to struggle on the whole.
Ross Rubin (@rossrubin) is principal analyst at Reticle Research, an advisory firm focused on consumer technology. Views expressed in Switched On are his own.