M.I.C Gadget had posted the side by side photos of iPad 3 and iPad 2 yesterday, which have provided more evidence that Apple’s next generation iPad will be slightly thicker and may feature a more tapered back casing.

In that report, which was essentially a round up of all the iPad 3 rumors, they’ve claimed that according to their sources, Apple is working on a sub $400 iOS device with 7-inch screen.

According to one of our sources, a sub $400 device with 7-inch screen is in development. The device, excelling in iOS gaming and multimedia, will come with a tapered design seen in the iPad 3. It will be offered with a low voltage ARM processor, a powerful GPU, and a large battery. It will enter into developing nations like Brazil and China, and compete with the smaller tablets. It will have some sort of wireless keyboard that’s not efficient on power, so a low voltage ARM chip is being used. The device will get a Q4 release date, as Apple is preparing to release it in time for Christmas 2012.

This is in line with the rumor reported by Wall Street Journal that claimed that Apple was working on smaller iPad with suppliers. However, according to WSJ, the smaller iPad would come with a screen size of 8-inches. Back in December 2011, a report claimed that AU Optronics and LG Display had sent samples of 7.85-inch display to Apple, who is gearing up to launch iPad mini early next year. According to that report, Apple is gearing up to launch a 7.85-inch iPad mini prior to the 4th quarter of 2012.

Steve Jobs had famously taken a dig at Apple’s competitors for launching tablets that sport a 7-inch screen. He believed that a 10-inch screen was the minimum screen size necessary for a tablet.

However, with competition from Amazon, which unveiled Kindle Fire – a $199 tablet that has been doing very well, it is possible that Apple is reconsidering its decision as it would expand its market.

If you want to see what a 7.85-inch iPad looks like then you can print the PDF (Home Screen (6MB)Keyboard (18MB) or checkout the actual size on your iPad by pointing Safari to following URL (launching it as a web icon from the home screen) that was created byMacRumors.

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