Apple (Nasdaq: AAPL), the world's most valuable technology company, may introduce a smaller version of the iPad to compete with products from Google (Nasdaq: GOOG), the No. 1 search engine, and Amazon.com Inc. (Nasdaq: AMZN), the No. 1 e-retailer, reports said.

An iPad Jr or iPad Mini with a screen only 7 inches by 8 inches diagonally without a high-definition screen -- something like an iPad Jr -- might be shipped in the fourth quarter, according to reports by Bloomberg News and The Wall Street Journal.

Representatives of Apple, in Cupertino, Calif., declined comment. Apple by custom doesn't discuss forthcoming products.

Google next week will start shipping its Nexus 7 tablet for $199, seven months after Amazon first shipped its comparably priced Kindle Fire. The 7-inch tablet will contain the latest version of the Mountain View, Calif., company's Android OS, known as Jelly Bean.

As well, Microsoft (Nasdaq: MSFT), the world's biggest software company, has announced it will ship the Surface tablet sometime in the second half. At its launch last month, Steve Sinofsky, Windows VP, said it would be priced like comparable tablets. Naturally, the Surface will be a Windows-based tablet.

So if Apple is building the mini-version of the iPad, the new wrinkle in Apple's tablet strategy would resemble its strategy with the iPhone 4S.

After last October's introduction, the company kept selling less-functional iPhone 3s for less, at $99 or even free, to maintain market share. The shift to brand extension was a change from the era of Chairman Steve Jobs, which indicates new CEO Tim Cook has other ideas about protecting market share. Apple lost its No. 1 rank in in the smartphone sector to Samsung Electronics (Seoul: 005930) in the first quarter, though.

Market researchers including Gartner (NYSE: IT) and IHS iSuppli (NYSE: IHS) say Apple dominates the tablet sector now, with more than a 60 percent share.

To be sure, not all brand extensions work. While it was still in the consumer PC business, International Business Machines Corp. (NYSE: IBM) launched the IBM PCjr into the consumer market, priced substantially below the top-selling IBM PC line. Complaints about its tiny keyboard and lack of versatility ultimately killed the product.

Todd Haselton, analyst with market researchers TechnoBuffalo of Irvine, Calif., said the iPad Jr might be 7.65 to 7.85 inches, with a screen resolution of 1024 by 768, similar to the iPad 2. The screen will be made by Sharp Corp. (Pink: SHCAY), which in March sold an 11 percent stake to Hon Hai Precision Industry (Taipei: 2317), also known as Foxconn, Apple's principal contractor.

While not as versatile as the current, $499 iPad, Haselton said the mini-version would attract consumers seeking a cheaper version as well as the benefits of Apple's huge library of applications and entertainment.

The new tablet could decimate Amazon, which has sold more than 5 million Kindle Fires since November, although 2012 sales have been slower, Haselton said. Amazon shares fell more than 1 percent on the Apple speculation.

Amazon, meanwhile, is likely to start selling a 10-inch version of that tablet later this year.

Not to be forgotten: Samsung, the South Korean powerhouse that is a key Apple supplier, has had huge success with its Galaxy Tab family. As well, tablets have also been introduced by China's Lenovo Group (Pink: LNVGY) and Japan's Sony Corp. (NYSE: SNE).

Combined, the other tablets now have about 39 percent market share, iSuppli estimates. The overall market for tablets this year may soar 85 percent to 126.6 million.

Shares of Apple rose $10.53 to $609.84 in Tuesday trading. Google shares gained $8.09 to $595.92 while Microsoft shares fell 6 cents to $30.70. Amazon shares fell $2.47 to $227.06.

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