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I would assume development cost would be minimal, relatively speaking, so why not. While Apple is obviously not going after the low end market, it would be good for them to have a less expensive tablet than the regular iPad to compete with the smaller and cheaper Android tablets and Kindle Fires that are available. If Apple doesn't offer a smaller iPad, they essentially concede that market segment, which I doubt they would want to do. Plus, along the lines of what jimlynch said, the size of a tablet can be a bit awkward if you don't always carry around a purse/briefcase/messenger bag.