How so? It could mean anything from the tablet market is saturate (thus everyone's sales is going down, as well as Apple's) to the 9.7" tablet market is saturated (so Apple's sales are down, but everyone else is unaffected). Of course, it could also mean that Apple is going down the drain and everyone else is going to see surging sales. But suggesting that would be blasphemous so I better not say that.

Anyhow, Apple probably made that comment about 7" tablets because they already had a 3.5" "tablet" and a 9.7" tablet and didn't want to dilute their market with a 7" tablet. Remember, more products incur more costs on Apple's side and makes purchasing decisions more complex for consumers. It is a lesson that Apple learnt in the late 1990s when they reduced their complex product line to a simple and highly differentiated product line. Since they didn't have plans for a 7" tablet at the time, they also needed to scare consumers away from 7" tablets to maintain their own sales. Thus their vocal dismissal.

Oops.