"They're going to have to care about that market," said James McQuivey of Forrester Research. "I don't think Apple will have the luxury of ignoring the [7-in.] form factor entirely."

Earlier today, , a 7-in. tablet manufactured by ASUS, that is now available for pre-order, with tablets shipping in mid-July. Prices for the Nexus 7 range from $199 for an 8GB device to $249 for a 16GB model.

Those prices, as well as almost every specification and feature Google revealed today, had been leaked before the kick-off of the Google I/O developer conference.

"It's a sweet device, there's no doubt about that, but it's more aimed at Amazon than at Apple," said Ezra Gottheil, an analyst with Technology Business Research. "It's an aggressively-priced tablet."

Amazon's Kindle Fire, which the e-tailing giant launched late last year, is also a 7-in. tablet that starts at $199. Analysts now expect Amazon to update the Fire in the next few weeks.