The 7-inch tablet space is officially crowded, but I use the word "tablet" with a grain of salt. Beyond Microsoft's Surface vapor-ware, no one is capable - or willing - to take on the iPad in that true tablet 10-inch size. More than ever, this fall is the perfect time for Apple to re-define this not-so-tablet 7-inch space for what it is - an entertainment product. Apple can take action and define this small-screen space as an iPod touch world, not a tablet market.
I didn't think Apple needed a small-screen device, but over time I've come around to believing the space can be easily dominated by Apple's abilities. Apple crushed any would-be competition in the MP3 market by delivering products in every price range with a seamless ecosystem, and they can do so again by filling the gap between the iPad and iPod touch with a larger iPod branded product. If Apple chooses to stay on the sidelines, it helps to keep the small screen market somewhat invalid, but over time a particular brand may catch on. Certainly Google and Amazon are planning on moving north into iPad territory sooner than later. Why should Apple allow them to build momentum, running unabated in the lower-class world?
Over 325 million iPods have sold to-date, with nearly half that figure being iPod touch. If suburbia is any indication of who uses iPod touch products, it's time for those kids that are moving into middle-school or high-school to upgrade to the next level of Apple experience. Not everyone can afford an iPhone for their 12 year-old, nor do many want to do so. A 7-inch or 8-inch iPod touch meets the need nicely. Launching a larger screen iPod touch this fall quickly defines the space. Small products are for gaming, a content paradise full of movies with iTunes and Siri control. In a month's time the small screen wannabe market becomes defined by Apple as being a toy for the world of kids. Want a real tablet? Get an iPad. Want a great gift for Christmas? Get a 7-inch iPod touch.
Amazon aggressively targeted the sub-tablet world last November at $199. But the Kindle Fire is slow, contains a horrible web browsing experience, feels cheap and has a less than acceptable low-resolution screen. Google raised the bar with the Nexus 7, landing squarely on the Fire's doorstep, also priced at $199. Apple need not enter the market in a sub-$200 price range. A recent survey reveals Apple could fall into the tweener screen market at $299 and dominate. A large Apple iPod touch would put an end to any competitive momentum, grab market share from the "wannabe" tablet space, and at the same define the space as a consumption-only market, not a true tablet/productivity market.