[psmith2.0]

Nothing?

It could still stay right where it is, and sell to those who don't want/need a 7-10" iOS device.

Maybe its price/capacity gets tweaked a bit so its positioning and existence makes a bit more sense. Maybe they can get it down to the $179-229 range for, say, two capacities...8 and 16GB? Keep a 32GB model around for the high-$200's?

Then a 16GB 7" iPad for $249 or $299 (add another $100 for 32GB)?

Hell, I'd almost get a 32GB 7" iPad for under $400, assuming it had iPad 2-type performance/specs (which is all I've ever known, and am completely happy with).

I don't know how much Apple would want to "tier" everything out (multiple offerings/capacities of the iPod touch and two different iPad lines). Could get a bit jumbled and cluttered, trying to figure it all out as a customer? But they'd figure it out...make a nice grid/chart on their site where everything is cleanly laid out and simplified, etc. They're good about doing that already with the iPhones, iPads and notebooks.

But I think all three could peacefully coexist...a more affordable iPod touch at current size/resolution, a new 7" iPad in that $249-349 spot depending on capacity, the full size iPad 2 in the $399 spot (as is), and the new iPad starting at $499.

Four distinct offering groups of non-phone iOS devices...three sizes, and, in the larger models, a "premium" in the form of the new iPad, with its Retina Display, A5x/graphics and LTE. Think of the $399 iPad 2 less as "last year's model" and, instead, as the "standard" iPad (maybe even jigger the names/branding if needed...lose the "2" to where it's just an "iPad"). Then view the $499+ models as the deluxe, higher-end models with nicer displays, improved graphics and the 4G stuff?

It's all marketing/branding at that point. None of them "suck". It's just "what size screen do you want? And what do you want to pay for?"

Apple's done this before in the iPods...several models not that far apart in price, but with different designs/capacities serving as the decision-makers. They did okay with that.

For some users, bigger won't automatically mean better, so Apple, in theory, could have a 3.5" iPod touch at $229 and a 7" iPad mini (for lack of a better name) starting in the mid-$200's. Despite the close pricing, depending on your needs/usage, some would be happy sticking with the touch, while others would gladly spend a few bucks more to get a larger device.