Apple has 7.85-inch iPad with 1024×768 display in its labs

As noted by TechnoBuffalo, well-connected Apple proponent John Gruber (of DaringFireball) made some interesting comments today regarding the oft-rumored “iPad mini” on his weekly 5by5 podcast with Dan Benjamin.

Gruber claimed that he has been told by a number of Apple insiders that a 7.85-inch tablet exists inside Apple’s labs, but he’s unsure when or if it will see the light of day…

Speculation regarding a sub-8-inch iPad has really picked up over the past several weeks. And we’ve heard a number of rumors, including one from The New York Times, claiming that Apple is working on such a device.

Today, Gruber weighed in:

“What I do know is that they have one in the lab, a 7.85″ iPad that runs at 1024 x 768. And it’s just like the 9.7-inch iPad shrunk down a little bit. The apps wouldn’t need to be redesigned or recompiled to work on it — it’s just the iPad smaller.”

To clarify, he goes on to say that he’s heard from “numerous people that it’s one of the ideas that [Apple] is noodling with.” But he has no idea when, or if, Apple plans on shipping it.

The case for a smaller iPad is becoming stronger by the day. With the success of sub-$300 tablets by companies like Amazon and Barnes and Noble, it would certainly behoove Apple to dip its toes in the market.