Apple introduced the 9.7-inch iPad and it "created" the tablet segment in one fell swoop. Millions picked them up and walked out of the store with one (or more) in tow. The mass display of me-too tablets at the CES last week is a testament to the tablet that Jobs built. While everyone else is playing catch-up, Apple could shake things up again with a more portable 7-inch iPad.
Most of the tablets on display at the CES were of a size and shape similar to the iPad. The call of the day was a 10-inch screen sitting in a roughly half-inch thick slate. If you lined up all the tablets at the CES and ignored the OS each was running, you'd have a mass display of lots of slates that looked more or less the same.
There were a few "trend-setters" that followed Samsung's lead with the Galaxy Tab, using a smaller 7-inch display. Samsung struck a chord with consumers wanting a tablet that functions more-or-less like an iPad, but with a lighter, smaller form that is more easily carried around. My experience with the Galaxy Tab proves quite a lot of folks are instantly struck with the more portable tablet when they pick one up.
With most competitors racing to release iPad-sized products, Apple could shake things up again by introducing a 7-inch iPad. It could do so without seriously hurting its established customer base, as most purchasers would likely be those who've passed on the iPad due to price and size. The smaller iPad would be cheaper, and as I've seen with the Galaxy Tab would instantly appeal to those who pick one up. A mini-iPad would cement Apple's dominance in the tablet segment, and create major competition for other 7-inch tablets due to hit the market soon. Existing iPad apps could run on the little iPad, so it's a win-win scenario for the folks in Cupertino. A little magic goes a long way, as proven with the iPhone.