Apple iPad
Apple's Latest iPad on DisplayReuters

Apple Inc, the undisputed king of the tablet world, seemed to have sensed danger following the release of tablets by other companies. Now, we hear that the electronic major is planning to come out with a smaller and cheaper iPad to face new challenges in the market.

News of Apple's plan to launch a smaller and cheaper iPad comes close on the heels of the debut of Google Nexus 7 and Microsoft's new Surface tablet.

Apple is reportedly developing a new tablet with a 7.85-inch screen that is likely to sell for significantly less than the latest $499 iPad with its 9.7-inch display, The New York Times cited several people close to the project as saying. The product is expected to be announced this year.

Apple's plan for an iPad 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, The New York Times quoted analysts and technology industry executives as saying.

It may be recalled that Google released its first tablet Nexus 7 at its annual developer conference Google I/O last month. The new tablet features a 7-inch, 1280x800 HD display designed for Google Play. It is the first device shipped with Jelly Bean, a new version of Android. Jelly Bean uses Google Now cards to help get the right information at the right time.

Joining the fight, Microsoft also unveiled its Surface tablet last month. Technology experts are thoroughly impressed with the tablet that has a built-in kickstand, a touch keyboard and is powered by operating system Windows 8.