Digitimes once again revives talk of a 7.85-Inch iPad. According to the site, Apple is likely to launch a 7.85-inch iPad prior to 4th quarter of 2012 in addition to a new iPad at the end of the 1st quarter. Apple reportedly is looking to take on the increasing number of competitors such as Android’s 7-inch Kindle Fire:

However, in order to cope with increasing market competition including the 7-inch Kindle Fire from Amazon and the launch of large-size smartphones from handset vendors, Apple has been persuaded into the development of 7.85-inch iPads, the sources indicated.

There’s been enough talk of such a device that it seems certain that Apple has at least been prototyping one over the past year. This previous mockup of such a device was discussed a year ago as a possibility:

Previous rumors have suggested that a 7.85-inch iPad would carry the same resolution (1024×768) as the current iPad. This would open the door to Apple differentiating their new iPad with a much higher resolution Retina display, while offering the old resolution on a physically smaller device.

Given the number of ongoing rumors, it seems certain that Apple has been experimenting with a 7.85-inch iPad. We’d guess its ultimate arrival will depend on how the market responds to the Kindle Fire and similar tablets in the coming year.