Apple is rumored to be working on an iPad mini, or 7-inch tablet, and a recent post from iMore suggested that the smaller tablet could be slated for an October release.

The blog cites an unnamed source who said that Apple might price its smaller tablet aggressively, to push out competitors.

The tablet, according to the source, would have the retina display of the third-generation iPad and would make up costs by cutting back on the memory in the mini device — offering just 8 GB.

If Apple does offer a smaller tablet — and at least one analyst has said that it’s a matter of if, not when — those rumored specs would put it in direct competition with the Kindle Fire.

The combination of having less memory and apps that run on retina displays could be a a problem for Apple users. If the company can figure out how to let users put their phone overflow into the iCloud to stream, that would help alleviate the problem.

It is worth asking how a smaller tablet would affect sales of the iPod Touch, which is like a really small tablet itself and which costs $199.

So, why might Apple shrink its iPad tablet and aim for that price range? As we’ve noted before, Apple could gain some foothold in Asian markets with a smaller tablet, which is easier for commuters to use while on mass transit.

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