The key attribute of smaller tablets is cheapness. The Google Nexus 7, for example, feels like a $400 gadget, but costs half that amount. The expected "iPad nano" coming this year will probably start at a price at or below $250.
Unlike phones, these tablets require an initial purchase, but not a long-term contract. So the initial price is the full cost of ownership.
Cheapness has two benefits where kids are concerned.
First is that it's more easily justified. Most parents probably don't spend $500 on a birthday gift for their kids.
But the second, less-appreciated benefit is expendability. If a child breaks or loses a $200 "toy," it's bad, but not horrible. A $200 device is worth taking a chance on.
Where do kids get their "stuff"? What is the source of the objects in kids' lives? As a former kid myself and a former parent of young kids, I would suggest that children get stuff from the following sources:
A $500 iPad is most likely to find its way into the hands of children via sources 1 and 2, but not 3-5.
A smaller tablet is almost as appealing to a child as a larger one, but can be acquired through all five sources.
Regarding source number 4, school programs, few people outside education appreciate the appeal of a $200 price point for what is essentially an all-purpose textbook reader and multi-media educational tool.
When Apple announced its series of educational and publishing initiatives in January, " I moderated a live hangout with some incredible educators. I was struck by the unanimous belief that price was the main thing holding the iPad back from mass acceptance in schools -- even for schools that can afford the price!
They viewed it as a safety issue for the children. There's no way school districts are going to send kids out the front door of the school with a highly coveted consumer electronics device that would make them targets for bullies and thieves.
A $200 gadget, on the other hand, is something most schools would send kids home with.
Another point most observers fail to consider: A $200 tablet without mobile broadband is a preferable item at school to a phone because the school can control and monitor the Internet connection. For example, schools can offer Wi-Fi connections only in specific buildings, or turn them off during tests.
Meanwhile, these smaller tablets, especially the small iPad, will benefit from more than two years of intensive app development for larger tablets.