I just read this argument how anyone that thinks Apple might do an iPad mini because of the Kindle Fire or Nexus 7 should be banned from writing about Apple. Seriously? I'd wager it's the other way round. Apple absolutely cannot afford to sit on the sidelines while Amazon and Google take over its prospective customers on the low-end and lock them into their ecosystems.
Yes, Apple knows all too well that Google's $199 Nexus 7 is a game-changer. Tim Cook understands this thing is gonna be big and you can bet he'll do something about it. Why else do you think Apple has started alerting the press that it's been working on a seven-inch competitor...