Report: Apple Mini-iPad Going Into Production

The Wall Street Journal is reporting that Apple's suppliers are gearing up for mass-production of a tablet smaller than the iPad.

The report lists South Korean LG Display Co. and Taiwan-based AU Optronics Co. as among the suppliers. Unidentified officials at one of the suppliers said that Apple has told them to prepare for mass-production of the tablet.

While the iPad is a smash with its 9.7 inch screen, the rest of the industry has chosen, with limited success so far, to ship smaller tablets. Samsung, Amazon and google are among them. The recently-announced Google Nexus 7 tablet has a 7 inch screen.

Microsoft's Surface tablet has a 10.6 inch display and will, according to the company, be "priced like comparable tablets." But it also functions as a notebook computer and notebooks typically have larger screens.

The smaller tablets from Amazon and Google also can be had for $199, less than half the cost of the cheapest iPad. It's unlikely that Apple would step down into the bargain bin like this. Both the Fire and Nexus 7 are sold at or near cost and aren't meant to make money on their own.

Apple's strategy for the iPad and iPhone has been high-price, high-margin, and their market power gives them a better negotiating position with suppliers. They will also be concerned about a low-price mini-iPad hurting sales of the full-size version. So look for the smaller product to retain Apple's luxury-item pricing.