As Apple works on smaller iPad, Amazon working on larger Kindle Fire

The tablet landscape has never been busier. Though Apple's iPad continues to reign supreme, Cupertino is reportedly working on a smaller version of its popular tablet to stave off competition from Amazon and Google.

The tablet landscape has never been busier. Though Apple's iPad continues to reign supreme, competition is seemingly becoming fiercer with each passing month.

Not only has Amazon's Kindle Fire been able to gain some respectable marketshare over the past few months, but Google's recently released Nexus 7 tablet has garnered almost universal praise from reviewers and tech pundits. Further, Microsoft's recently unveiled Surface tablets are also worth keeping an eye on.

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And what do the Kindle Fire, Microsoft's Surface tablets, and the Nexus 7 all have in common when measured up against the iPad? Why a smaller screen of course.

To that end, there have been a growing number of credible reports pointing to a slender 7.85-inch iPad being released sometime before the 2012 holiday shopping season. And lending their voice this weekend to that chorus was the New York Times.

Citing people familiar with Apple's plans, the Times reports that Apple is working on a smaller version of the iPad that will retail for "significantly less than the latest $499 iPad."

Apple’s plan for a tablet with a smaller screen is part of a textbook business strategy: to lure customers who want different sizes of tablets into the iPad product family, say analysts and technology industry executives.

While Steve Jobs previously scoffed at the notion of a 7-inch tablet, a 7.85 inch tablet allows for much more screen real estate than a 7-inch tablet. Also, regardless of what Steve Jobs thought, the market has spoken and, like it or not, people seem to really be enjoying 7-inch tablets.

Interestingly enough, while Apple is apparently keen on getting the iPad smaller, Amazon is interested in bumping up the size of the Kindle Fire, the Times reports.

And Amazon is working on a new version of the Kindle Fire, with a larger display, that could compete more directly with the iPad, according to a developer briefed on Amazon’s plans who did not want to be identified talking about unannounced products. Analysts also believe that Amazon is updating the Kindle Fire.

With respect to profitability, it's much easier for Apple to churn out a smaller iPad than it is for a company like Amazon to create a larger version of the Kindle. And even with the current 7-inch Kindle Fire, Amazon reportedly loses money with each device sold in the hopes of recouping that money with Amazon Prime sales.

The holiday shopping season should be very interesting indeed, especially if Microsoft can manage to release its Surface tablets by that time.

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Copyright © 2012 IDG Communications, Inc.