Apple Preps iPad 2 for Early 2011 - TheStreet

Apple Preps iPad 2 for Early 2011

Production plans call for a smaller 7-inch tablet to be released after the holidays, avoiding a clash with iPad 1.
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NEW YORK (

TheStreet

) --

Apple

(AAPL) - Get Report

is gearing up for production of a smaller second-generation iPad to be launched in early 2011.

Apple's plans call for an iPad 2, which will be a 7-inch touchscreen tablet with a front-facing VGA camera and a 1-megapixel rear camera targeted for a March arrival, says Rodman Renshaw analyst Ashok Kumar, who has talked to Apple's supply and manufacturing partners.

The details of the iPad 2 help confirm recent rumors that Apple was shrinking the popular iPad to defend its position against a wave of smaller new tablets like the

Dell

(DELL) - Get Report

Streak (a 5-inch device) and the

Samsung

Galaxy Tab (7 inches). But unlike earlier reports that called for a new iPad in time for the holidays, the new information puts the arrival closer to spring.

The iPad 2 is being made by

Pegatron

, the Taiwan contract manufacturer that is also assembling Apple's CDMA iPhone, which is expected to appear at

Verizon

(VZ) - Get Report

early next year, says Kumar.

Apple's decision to introduce a smaller, presumably cheaper follow-up to the original iPad is a bit puzzling. Clearly it signals the possibility that Apple sees a threat to its tablet franchise at the lower price levels. But Apple may also want to shrink the device so it doesn't cannibalize its notebook sales.

The news of the iPad 2 comes less than a week after

Samsung unveiled its Galaxy Tab

, a touch-screen device that will arrive at Verizon,

Sprint

(S) - Get Report

,

AT&T

(T) - Get Report

and

T-Mobile

in the coming months.

--Written by Scott Moritz in New York.>To contact this writer, click here: Scott Moritz, or email: scott.moritz@thestreet.com.To follow Scott on Twitter, go to http://twitter.com/TheStreet_Tech.>To send a tip, email: tips@thestreet.com.