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SAN FRANCISCO: Apple plans to introduce a cheaper iPad by the end of the year to help maintain its dominance of the tablet market.

The new model will have a smaller screen compared to the current 9.7-inch version, said the sources. Apple may announce the new product by October, however the new pad will not have the high-definition (HD) screen featured on the iPad that was released in March, said one of the sources. The new device will probably have a price closer to Google's Nexus 7 tablet and Amazon's Kindle Fire, both of which have 7-inch screens and cost around $199. Since the iPad went on sale in April 2010, Apple has dominated the tablet market.

Apple's rivals are eager to gain a toehold. Google said on June 27 that it will sell a tablet-style device called the Nexus 7. Earlier this month, Microsoft announced a tablet called Surface that will have a similar screen size as the current iPad. The entrants' best chance of success has been to focus on markets where Apple had no toehold. The Surface comes in two models that are most likely to appeal to buyers who want to continue using Microsoft's Windows software. While Microsoft has not disclosed pricing or timing for either, the higher-end version will probably be costly than the iPad and targeted more at an emerging class of laptop PCs called Ultrabooks.

The latest iPad ranges from $499 to $829. Google's Nexus 7 could stack up well against Amazon's Kindle Fire, which went on sale in November, 2011. The Nexus 7, manufactured by Asustek Computer, has a faster processor and better battery life than the Kindle Fire, as well as a front-facing camera. Still, competing with a lower-priced iPad will be more challenging.

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