On that rumor that Apple will offer a iPad Nano in late 2012

Those of us who read Digitimes will read their latest nugget of juicy gossip, that Apple will offer a 7.85 inch 'iPad Lite' in late 2012, following release of an iPad 3, and conclude that, once again, Digitimes may be right, is probably wrong, but damn if those Taiwanese don't know how to score pageviews and linkbacks to their humble site.

What they say:

Apple is likely to launch a 7.85-inch iPad prior to the fourth quarter of 2012 in addition to a new iPad scheduled to be released at the end of the first quarter, according to sources in the supply chain.

Global shipments of tablet PCs are expected to reach 60 million units in 2011, of which 70% will be Apple's iPads. To cash in on market demand as well as market expectations, Apple is expected to release its next-generation iPads at the end first-quarter 2012, said the sources.

However, in order to cope with increasing market competition including the 7-inch Kindle Fire from Amazon and the launch of large-size smartphones from handset vendors, Apple has been persuaded into the development of 7.85-inch iPads, the sources indicated.

In addition to purchasing 7.85-inch panels from LG Display, Apple will also buy panels from AU Optronics (AUO), indicated the sources, adding that makers in the supply chain are likely to begin production of the 7.85-inch models at the end of the second quarter of 2012.

Don't spend too much time focusing on that whole "indicated the sources" line. The odds that I'm the source are just as high as their source being some Apple exec talking shit to some high-priced whore sent to his door in his posh Shenzhen hotel suite.

Though I"m not the source.

Here's all you need to know re this, since I wrote about this issue earlier this week:

For the capable, if limited -- and crappy -- first iteration of Kindle Fire to sell 6 million units in its first quarter, then 15-20 million units in 2012, I believe it must be priced at an almost-disposable level; where consumers know that they have no right to bitch or complain or demand more.

That price, as HP's TouchPad fire sale has revealed, is $99.

Until Kindle Fire is $99, which won't happen til 2013 at the earliest, I think Goldman's numbers are off by about 2X. I'm sticking with my prediction of (just under) 3 million units for this quarter.

That said, if I'm wrong, or more to the point, if Goldman is right, or even close to right, then that absolutely will get Apple's attention. iPad 2 and Kindle Fire are different devices, with different strengths, different markets, different use cases. But, as we all know, there is a great deal of overlap.

Thus, if you're an Apple fanboy, take heart. If Kindle Fire sells as well as Goldman states, then Apple absolutely will jump into the 7 inch, limited function mini-tablet space. Fast. They will not cede a large market for tablets. Period.

Apple has every intention of dominating the "tablet" market for years. Amazon's Kindle Fire, at $199, is well priced but extremely limited. For Apple to offer another tablet form factor, with all the pains this would cause it's supply chain, its product display, not to mention its impact on the half million existing apps, many of which are optimized for the current iPad screen, they have to believe that they cannot get the iPad 3 price down to an acceptable level, where "acceptable" means at least a 30% + profit margin and that there is an extremely large market that, at least for the next several years, have no desire to spend more than about $300 on a tablet since they have no desire to use a tablet for anything other than eReading, web surfing and occasional video watching.

Better for Apple to go down market in this case, then to stand pat and allow Amazon, with its solid ecosystem, brand name, distribution and legit hardware abilities to go up-market.

All this speculation, as much as it highlights the battle between Amazon and Apple, should not move us from the larger picture: the rapid rise of the tablet, in all its forms, is remaking the web, fundmanetally altering our relationship with our televisions, and destroying several existing markets, including for PCs, publishing, advertising and retail. 

As these industries are brought down, new opportunities will arise.