The latest buzz from the Apple rumor mill is about the mythical mini iPad which according to new reports is due out in the last quarter of 2012.

Rumors about the iPad mini have refused to die down and news reports from China are stirring the speculation discussion even more. According to Chinese site NetEase, translated by Kotaku, a mini iPad is due to be released later this year to combat Windows 8 tablets as well as other Android models. The mini iPad will be priced at around $249 to $299, making it half the price of the new iPad on sale now.

Reliable sources are also saying that Apple is developing retina display screens for a smaller tablet. Speculation about smaller screens isn't anything new as reports earlier this month have highlighted the possibility of a smaller screen for some Apple products. Last week there was speculation about the next iPhone having a smaller 4-inch screen. The mini iPad story has been around since 2009 when an iLounge report cited an anonymous source saying that Apple had created several version of the iPad including a 7-inch model. The 7-inch model was eventually dismissed because it was too small.

While reports about a smaller iPad are easy to dismiss because of the dubious nature of the sources and the adamant refusal of the late Steve Jobs against a smaller iPad, there are also a number of compelling reasons why Apple would want to consider an iPad mini. Apple is facing stiffer competition from other tablet makers than it had in the past. Amazon's Kindle Fire proved to be a successful cheaper alternative to the iPad and Google's Android is poised to push back in the tablet market. There is also the emerging market to consider. According to Jeff Orr, group director of consumer research at ABI Research, customers in emerging markets are more likely to buy low-cost tablets with 7-inch to 9-inch screens.

"The majority of new entrant media tablet models have been in the sub-$400 segment that focuses on growth markets like India and China. The strong wave of growth in this segment over the next few years is expected to be driven by the adoption in emerging markets," he said.

A smaller screen size wouldn't pose as much a problem with resolution as Steve Jobs had feared. Apple and its manufacturing partners have the technology to make smaller screen sizes with the same resolution as the original iPad. Developers would also learn to adapt to a smaller screen size with no difficulty, the iPad mini could automatically resize any iPad apps to fit the smaller screen.