Is Apple coming up with a 7 inch iPad?

According to a Bloomberg report, "Apple maybe readying iPad with smaller 7 inch screen". Ashtok Kumar, an analyst at Rodman & Renshaw LLC, wrote in a research that Apple plans to release the smaller iPad by the first quarter 2011. If his analysis holds true, then Apple is the first to blink in a brewing war to control the tablet computing market.

The 2010 IFA consumer electronic show in Germany saw the unveiling of Apple iPad's main competitor in the Samsung Galaxy Tab. It includes three main features which the iPad doesn't currently have - a mobile phone, a dual camera with a Flash Player 10.1. It also weighs just half the Apple iPad, with a 7 inch screen and the first tablet device to run on Android OS 2.2 - Froyo.

Samsung also announced that the Galaxy tab will head towards all four national carriers in the US - Verizon, T-Mobile, Sprint and AT&T (which Apple chose to exclusively carry its products) - when it will be available in the US market this October or November.

At the same time, reports also indicate that Apple will skip the normal 1 year upgrade cycle by incorporating Apple's video conferencing standard called Face Time. Also, similar reports indicate that soon to be released iPad will also include a built-in camera.

It seems Apple is jittery these days. It is matching, feature by feature, the Samsung's Galaxy tab. Will it be able to effectively fend off the competition?