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iPad 2 May Include Cameras, 7-Inch Screen

A veteran technology analyst says the next generation of the iPad will be a downsized version equipped with a smaller screen and cameras that support Apple's FaceTime video conferencing application.

Ashok Kumar, of Rodman & Renshaw, said the new features are almost a certainty and that he based his prediction on conversations with the Asian component manufacturers, such as Pegatron, that supply Apple with parts for its mobile devices.

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Kumar, in a research note, said he believes the so-called iPad 2's screen will shrink to seven inches, from the current 9.7-inch size, and that the cameras will offer HD quality video recording. Kumar thinks the new iPad will arrive sometime in 2011.

If Apple does shrink the iPad, it would be taking a page from Samsung, whose 7-inch Galaxy is enjoying a positive reception from consumers and tech watchers.

The Galaxy, which runs Google's Android mobile operating system, is meant to bridge the gap between cell phones, seen as too small for comfortable multimedia viewing, and tablets like the iPad, which are too bulky to be easily carried in a pocket or purse.

Apple introduced the iPad earlier this year. Since then, it's been one of the tech industry's hottest selling products. Indeed, Apple has said it sold three million iPads in the first 80 days the touch-screen tablet computer was on the market.

Apple is positioning the iPad—essentially an oversized iPod touch--as an all-purpose handheld that's optimized for e-reading, viewing videos and images, and gaming.

Pricing for the Wi-Fi only version of the current model, which features 802.11 connectivity, starts at $499 for the 16GB edition, $599 for the 32GB edition, and $699 for the 64GB edition. The Wi-Fi + 3G versions are priced higher. The 16GB model is $629, the 32GB model is $729, and the 64GB version is priced at $829.

Apple shares were up 2.02%, to $280.93, in early afternoon trading Monday.