Is Apple running scared of the 7 inch tablet?

It's possible, and iPad sales didn't meet expectations either

Apple's iPad sales were short of the expected 5 million for the quarter

Despite many businesses talking up the capabilities of the iPad, including high-profile organisations such as the BBC, SAP and the army, sales of the tablet have failed to impress this quarter.

The company sold 4.19 million iPads in the fiscal fourth quarter of 2010, but analysts had expected the figure to be closer to 5 million. As a result, the company’s shares slid 6 per cent in after-hours trading, marking Apple’s biggest single-day loss since 2008.

CEO Steve Jobs appeared not to be in the best of spirits upon announcing the bad news, and took the opportunity to lash out against competitors.

"The current crop of 7-inch tablets are going to be DOA; dead on arrival," Jobs told analysts on a conference call.

"Their manufacturers will learn the painful lesson that their tablets are too small."

However, the Apple chief's analysis is somewhat countered by recent research from Gartner which argued that uptake of 7-inch tablets will dent growth in sales of smartphones, because users will find it hard to justify owning both. It is therefore potentially a significant threat to both the iPhone and the tablet.

"Overall, Apple surpassed its quarterly earnings expectations, which was primarily driven by strong sales of its iPhone."