Our well informed industry sources have confirmed that there will be a smaller iPad that will launch this fall, probably by October.

The more interesting rumor is that the CPU behind this small device might come from the house of Qualcomm and not from Apple, but this is not something we can confirm today.

Apple has realized that compact and affordable tablets such as Amazon’s Kindle Fire or the new Nexus 7 have attracted millions of users and despite the fact that it sold 17 million iPads in the last quarter, Cupertino realizes that it is losing a lot of market to Amazon and now Google.

Apple will probably charge more than $199 for its tablet simply as it can and the device itself might end up larger than 7 inches, but certainly smaller than 9 inches. Steve Jobs didn’t like the 7-inch form factor and failed to see their potential. He was definitely wrong about it as with the right price Amazon sold 3.8 million of Kindle Fires in a single quarter despite its limited and locked software. 

There is no doubt that a smaller iPad, let’s call it iPad mini, will happen it only remains to be seen if Apple will use one of its own Ax branded CPUs or it will turn to Qualcomm.

Remember Qualcomm is currently the only company that has 4G integrated on its S4 series processors and 4G is very important for USA, hence the possibility for Qualcomm in 4G mini iPad. As for the Wi-Fi version, Apple can probably find a fitting chip in its own herd of A5 series SoCs.