Back in May, iMore heard that Apple planned to move ahead with a 7-inch iPad this fall at a $200 price point. Stories about a smaller iPad have been around for a while, but as far as I know that was the first time such aggressive pricing got tagged onto them.
The reasons Apple was planning this, we heard, was the same reason they planned and executed on the lower price point iPod mini and iPod nano -- to take the oxygen out of the market. In this case, to leave no room for discount competitors like Amazon and Google.
Some have a hard time believing Apple would enter the low end tablet market. Apple didn't make a netbook and didn't release an iPhone nano. They thought differently and released the MacBook Air and the iPad, and kept around previous generation iPhones instead. Steve Jobs went so far as to say 7 inch tablets were DOA. So Apple couldn't, wouldn't, and shouldn't do an iPad mini, right?