One possibility: An 8-in. iPad with just 8GB of storage space, or half the amount in the lowest-priced iPad 2, that comes in both Wi-Fi and 3G flavors.
Like other analysts, Alexander is betting that Apple will keep the iPad 2 in its tablet line-up after launching the iPad 3, as most have called the next model, and will cut the price of the older device, as it did the iPhone 4 last year after introducing the iPhone 4S. A $100 price cut, which would start the iPad at $399, is more than doable, she said.
"As we move out into 2012, the pricing of the iPad has got a lot of wiggle room," Alexander said. "They can knock it down by $100, but actually they have the room [in the cost-to-build] to knock the iPad 2 down more than that."
She dismissed concerns by some that adding a smaller iPad to Apple's offerings would force developers to support another screen resolution -- an 8-in. would sport the same format of 1,024-by-768 pixels as the current iPad, she said.