Apple‘s iPad is selling about as fast as they can make the things, and it’s not even completed its international roll-out yet. It stands to reason, then, that Apple’s probably upped its efforts to develop the iPad’s successor (given how long it takes for a design to go from concept to reality). This iPad 2 we would notionally have expected to be announced in January 2011, a year after the first device hit, and we still expect this to be the case. But now there’s an increasingly real-sounding rumor that Apple has another 7-inch version on the way, and it may even arrive this year. Strangely enough, it’s a rumor that makes perfect sense.

Seven-inch iPad rumors have popped up before, but these latest ones come directly from China’s Economic Daily News newspaper, which pretty much nailed the original iPad’s format and timing well before its launch and at a time when other media outlets were pondering if it was going to be Apple’s netbook. Hence when the paper reports that some Taiwanese firms have won the contract to supply the new iPad, it’s worth paying attention.

Chimmei Innolux has apparently been selected to supply the 7-inch IPS LCD units, though we don’t know if these screens will have the iPhone 4’s “retina display resolution” or the same pixel count as the existing iPad–the first case would be technologically trickier, and the second would allow for simpler programming issues. Touchscreen tech would be from Cando, and Compal Electronics (which already is the premier place to assemble laptops) will be putting the thing together. Interestingly Foxconn, which is one of Apple’s biggest supplier/assemblers at the moment isn’t mentioned here: Has Apple shied away from the firm, in the wake of all its bad PR?

The main thing to remember about the 7-inch iPad speculation is that competitors with screen sizes in this mid-range are beginning to appear and will arrive in greater numbers later this year. It would result in a smaller, lighter iPad, solving one of the minor gripes that some users have about the initial device: That it weighs a fraction too much to hold after a while. Peering at the guts of the first iPad, it was clear that there was a lot of empty space inside the thing, so it’s easy to imagine all the battery and electronics tech being squeezed into a smaller shell. The screen is also exactly twice the diagonal size of the iPhone’s, which may have design and construction implications.

In the end, a 7-inch iPad would appeal to a slightly different audience than the 9.7-inch unit for two reasons: Size and price. Some folks would find its reduced bulk more convenient (if you’re a habitual hand-bag user perhaps). Other users would find the smaller screen of this mid-sized system less convenient than the bigger iPad’s, but of course they’d be able to buy the larger unit. The lower price–which is an assumption, but a reasonable one–would make the iPad “mini” more competitive in the soon-to-be-crowded tablet market, and would place it in financial reach of many millions more consumers. The initial $500 price of the iPad was a surprise to many commenters to whom the fictitious “Apple Tax” was seen as a problem, and if Apple could manage an entry point for the new iPad at around $300, it would have a super-hot seller on its hands. Think of the iPad mini as the equivalent of the iPod Touch to the iPhone, and you can see what I mean.

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