It is funny to see people saying it is a reaction to Fire, Nexus 7. When Apple developed the first IPad, I am sure they had many size and then decided on the 10". Does it mean other size aren't wanted, of course now. They just felt that if they were to focus on one size, 10" was the way to go. Now that they are on the 3rd generation and things like screen, battery have improve, they probably see a market for a well made 7-8" as well. As long as it comes with the typical Apple quality, it will be great to have another choice.
I doubt they are doing this to thwart Kindle and Nexus 7 since iPad is still dominate. And Apple products are in the pipelines for a long time. It is likely they always had this form factor in mind and was just waiting for the technology. This is similar to making the releasing the iPhone using iOS which was actually developed for tablets but large touch panels were still too expensive. Wouldn't surprise me if Apple were also looking at larger sizes and waiting for certain criteria to be met.
I doubt they are doing this to thwart Kindle and Nexus 7 since iPad is still dominate. And Apple products are in the pipelines for a long time. It is likely they always had this form factor in mind and was just waiting for the technology. This is similar to making the releasing the iPhone using iOS which was actually developed for tablets but large touch panels were still too expensive. Wouldn't surprise me if Apple were also looking at larger sizes and waiting for certain criteria to be met.