The word is out - at least from the Wall Street Journal - that Apple's suppliers are already testing the components for an 8-inch iPad. The resolution will not be retina display, just the same as the iPad 2.
The most probable reasoning behind making a smaller iPad is to compete with Samsung's and Amazon's bestselling 7-inch tablets.
The speculation is that the price of the smaller iPad will be cheaper than the current iPad 2. This would help Apple to compete with competitors like Amazon's Kindle Fire, which is cheaper.
