At $250, the Mini would still be more expensive than its $199 competitors, Google's Nexus 7 and Amazon's Kindle Fire, but White argues that the Mini would be a "higher quality" product that offers consumers an overall better experience than its competitors, as well as a robust ecosystem.

"Ultimately, we view the potential addition of theiPad Mini as a long-term positive for Apples iPad franchise and necessary to keep competitors from trying to control the lower price point segment of the market," he concludes.

While no company is enamored with undercutting the sales of existing products with new products, Apple has shown in the past that it will tolerate cannibalization if the Big Picture demands it. That was the case when it introduced the iPhone, which it knew would .

"It's better that Apple cannibalizes itself than anyone else cannibalizes Apple," observes Bob O'Donnell, IDC's research vice president for clients and displays. "You want your customers to use your stuff."