Simple answer? No. Will they do it? Probably. Here is why.
With the success of the Amazon Kindle Fire, Apple can no longer sit idly by and watch this part of the market get gobbled up by a competitor. An avalanche must be averted.
Non sense. Apple enter a market when they can transform it or make a real difference or simply become the best. Apple isn’t about market share. Google is.
If Apple ever produce a smaller iPad, something between an iPod or a currently shipping iPad, it will be because they feel that as a whole, the smaller iPad coupled with the iOS ecosystem is better than what Amazon can offer for the same kind of device. As the original iPad created a whole new device category, a smaller iPad must bring an uncompromised user experience at an attractive price point. Something that I’m not sure Amazon is currently offering with the Kindle Fire.