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The Apple logo is seen in this September 11, 2012 file photo at the Yerba Buena Center for Arts in San Francisco. (Kimihiro Hoshino/AFP/GettyImages)
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Now, for some real pocket change.

With press reports surfacing that Apple (AAPL) has begun producing a so-called iPad Mini in China, and one saying it may be unveiled as early as this month, excitement mounted Wednesday over a smaller and less-expensive tablet that can be tucked away neatly into a purse or a sportcoat.

Rumors have been rife for months that Apple was on the verge of bringing out a pint-size weapon in its battle with tablet competitors like Amazon's Kindle Fire and Google's (GOOG) Nexus 7. Earlier this week, Fortune magazine cited an unnamed "major Apple investor" saying invitations would go out to the press next week for the iPad Mini's debut, with the big event reportedly set for Oct. 17. Apple did not immediately respond to requests for comment, so it's not even clear what the new device might be called.


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"Even though we all remember Steve Jobs saying you'd have to file down your fingers to use a seven-inch tablet, it sounds like it's finally going to happen," said Charles Wolf, an analyst with Needham & Co. "But while it's been proven there's a market for a smaller iPad, I think it's the lower price point that Apple's concerned with."

The new iPad starts at $499, while its smaller rivals -- such as the Kindle Fire, which starts at $159 -- are much cheaper. "Apple's just trying to protect its flank, just like they did with the iPod," Wolf said. "They started with one version, then the Mini, then the Shuffle, then the Nano, and finally the Touch. They really try and cover all price points with different devices."

A miniature tablet, with a screen downsized from the iPad's 9.7-inch diagonal to a 7.85-inch display, would be a step in that direction, and its reduced price would enable many more customers to get their hands on the gadget. In turn, Apple could maintain the stranglehold it currently enjoys in the tablet market.

Wednesday's buzz came after The Wall Street Journal, using anonymous sources within Apple's Asian supply chain, reported that South Korea's LG Display and Taiwan's AU Optronics started cranking out 7.85-inch LCD screens for Apple last month, and that workers were already mass-producing the new gadgets.

"We view the potential addition of the 'iPad Mini' as a long-term positive for Apple's iPad franchise," Topeka Capital analyst Brian White told investors, "and necessary to keep competitors from trying to control the lower price point segment of the market."

One of the biggest questions, of course, is how Apple might price an iPad Mini. "My best guess is it'll clearly cost less than the iPad 2," Wolf said, "so maybe $299 at the high point, though I suspect Apple might push it down to $249 just so they can get closer to that magic $199 price point of the Kindle Fire HD and Nexus 7."

Jobs, who died last October, was famously opposed to the 7-inch competitors, which he said would be "dead on arrival." But as the iPad continues to insinuate itself into popular culture as well as industries and trades, including health care providers and even airline pilots, many of its users are now eyeing those other tablets and wondering if size really does matter.

Not to mention saving a couple hundred bucks.

Contact Patrick May at 408-920-5689. Follow him at Twitter.com/patmaymerc.