I think this is more Apple's way of making iPads more available. If they keep a 1024x768 IPS display for this device they free themselves of the supply chain constraints for the 10" screen which has been reported as the main limiting factor to how many iPads they can make (and thus sell).
Plus, if they can sell it for $100-$150 cheaper they will make it more readily available to all.
B
I thought the same thing. Sure, there’s a market for larger AND smaller iOS devices. Just like we have multiple MacBook sizes today. But it seems too soon—something that should ideally happen later, for the sake of a more-cohesive iOS app market and a streamlined iOS development process.
Theoretically, within the coming months iOS could be fragmented into up to six different screen formats:
* 3GS and low-end iPod at 3.5”
* iPhone 4 and new retina iPod at 3.5” double-res
* Classic iPad at 10”
* Future high-res “retina” iPad, 10” at double-res
* New iPod Nano (or whatever) with ~2” touchscreen (might or might not be iOS)
* New 7” iPad (probably not double-res, to keep it cheap); either 1024x768 or 960x640
However, balancing all that fragmentation, if Apple can sell a TON more iOS devices by jumping on different screen sizes sooner rather than later, then the platform AND developers both stand to benefit. Not to mention users. (But the best apps will always be the ones with a UI custom-designed for a specific size. Hopefully Apple can make that difference extremely clear in the App Store—it’s already not obvious at first glance. Maybe some kind of store icons for that devices each app is “best” for, vs. what devices it will simply run on.)