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You are talking about products that are one to two models behind the current leader. While they work great and people will buy them, they are not the big seller. People are shelling out almost $1000 for the higher end IPad 3 and $399 for the higher end IPod Touch.
A 7 inch IPad is going to be a new device. I suspect that a 8 GB version would start in the $300 range, somewhere between the current IPad and current IPod Touch.
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