FORTUNE — Although the dean of Apple (AAPL) bloggers makes no secret of the fact that he has unusually good sources within the company, Daring Fireball‘s John Gruber is usually pretty discreet about what exactly he’s been told. So when he writes — as he did Monday — that he’s heard from “little birdies” in the Cupertino area that Apple is working on a smaller iPad with a very specific screen size (7.85 inches diagonally, 1024 × 768 pixels), Apple-watchers do well to take notice.
Gruber has written short items about this smaller iPad before, but in one of his signature long-form blog posts he pulls together everything he’s seen and heard — including arguments for why Apple shouldn’t build an iPad Mini — and makes the case for what he describes as an 8-inch (not a 7-inch) iPad.
Gruber’s answers to the skeptics’ objections:
- The size problem — It’s a mistake to call it a 7-inch iPad, says Gruber, because a 7.85 inches diagonal is closer to 8 inches than the 9.7-inch diagonal iPad is to 10 inches (and nearly everybody refers to the current iPad as a 10-inch tablet). Most 7-inch tablets have been disappointments. An 8-inch tablet needn’t be.
- The sandpaper problem — When Steve Jobs said you’d need to sandpaper your fingers to use a smaller iPad he was talking about a 7-inch screen (46% the surface area of today’s iPad), not a nearly 8-inch inch screen (64%). [According to Jobs and Gruber’s geometry, the ratios are 45% and 66%.] Besides, Jobs was famous for changing his mind on a dime.
- The tap-target problem — Gruber cites something called Fitts’s Law to prove that the tap-target size on the 8-inch tablet is well within Apple’s 44-pixel guidelines. It is, in fact, the same as the iPhone’s.
- The Retina display problem — So what if the new iPad’s screen resolution is less than the latest iPhone’s and iPad’s? Apple may be trying to keep the cost down. Besides, the company usually adds Retina displays to its devices as an upgrade two or three years down the road.
- The price-point problem — With its economies of scale, Apple could probably sell the new device for $199 and make a decent 25% margin. Or it could price it at $249 and still sell a boat load. Gruber leans toward the lower price, figuring that it’s more important right now for Apple to seize control of the post-PC market and not leave any price-umbrellas open for its competitors.
It’s classic Gruber — opinionated, authoritative and funny — and it gives you a pretty good sense of what Apple might have up its sleeve. It’s called “Lets Try to Think this iPad Mini Thing All the Way Through” and you can read it here.