Amazon Kindle Fire
Amazon Kindle Fire Reuters

Apple Inc. has long denied the possibility of a 7-inch iPad to counter Android-based tablets tormenting the Cupertino-based tech giant with their low prices.

In 2010, there were reports indicating the possible arrival of an iPad Mini with a 7-inch touch screen, around Christmas time. The reports, however, were denied by co-founder and then CEO of the company, Steve Jobs.

A year later, Apple is once again rumored to be getting ready for the launch of its answer to Amazon's $199-priced Kindle Fire. Apple's new product, it is believed, will be launched in the first few months of 2012.

Ticonderoga Securities analyst Brian White, cites sources in China and Taiwan, from where Apple supplies key components for its devices, that suggests Apple is arriving with the Mini device. The name Mini refers to the size of the device... and not the price.

We believe this lower priced iPad could be priced in the mid-to-high-$200 range, White wrote in a note to investors, We expect this will be followed by a much more powerful, feature rich standard-priced iPad 3 in (the second quarter of 2012).

The screen size will be a big question for tech journalists, as Jobs', Apple's former CEO, said in 2010 that 7-inches is too small a screen size and users probably won't be very comfortable with that.

Meanwhile, Rodman & Renshaw analyst Ashok Kumar suggests that Amazon will be able to sell 5 million Kindle Fire tablets by the end of this year.

If, by chance, Apple does launch a device called iPad Mini, it could still be tough for them to beat the Kindle Fire.

Amazon doesn't make a substantial profit on sales of Kindle hardware and content such as e-books and music. Instead, the Seattle-based online-retail giant generates its profits on sales of shoes, diapers, and every other kind of physical product imaginable. Similar to Wal-Mart and other large brick-and-motor retailers, Amazon's content business is designed to lure in consumers to buy such everyday goods as well as other money-making items, market-research firm iSuppli said in statement.

Keeping this point in mind, Apple will have to substantially increase the iPad Mini's price from $199, as te components used by Apple will be costlier than those used by Amazon.

Following are the specifications of the Kindle Fire:

Display: 7 multi-touch display with in-plane switching (IPS) technology and anti-reflective treatment; 1024 x 600 pixel resolution at 169 ppi; 16 million colors.

Size: 7.5 x 4.7 x 0.45 (190 mm x 120 mm x 11.4 mm).

Weight: 14.6 ounces (413 grams).

On-device storage: 8GB. (That's enough for 80 apps, plus 10 movies or 800 songs or 6,000 books.)

Cloud storage: Free cloud storage for all Amazon content.

Battery life: Up to 8.0 hours of continuous reading or 7.5 hours of video playback, with wireless off. Battery life will vary based on wireless usage, such as Web browsing and downloading content.

Charge time: Fully charges in approximately 4.0 hours via included U.S. power adapter. Also supports charging from your computer via a USB connection.

Wi-Fi: Supports public and private Wi-Fi networks or hotspots that use the 802.11b, 802.11g, 802.11n, or 802.1X standards with support for WEP, WPA, and WPA2 security using password authentication; does not support connecting to ad-hoc (or peer-to-peer) Wi-Fi networks.

USB: USB 2.0 (micro-B connector).

Audio: 3.5 mm stereo audio jack, top-mounted stereo speakers.

Content formats: Kindle (AZW), TXT, PDF, unprotected MOBI, PRC natively, Audible (Audible Enhanced (AA, AAX)), DOC, DOCX, JPEG, GIF, PNG, BMP, non-DRM AAC, MP3, MIDI, OGG, WAV, MP4, VP8.

Warranty and service: 1-year limited warranty and service included. Optional 2-year Extended Warranty available for U.S. customers sold separately.