Apple will introduce a iPad mini in October, Pacific Crest analyst Andy Hargreaves has predicted.

Expected to launch at $299 - $100 more than the Google Nexus 7 - the smaller iPad will boast a 7.8 inch screen and 8GB of storage.

"We anticipate an entry-level 7.85" iPad with 8GB of NAND capacity to price at $299 with an initial gross margin of 31%," wrote Hargreaves in a report published last week. "We estimate Apple will sell 10.0 million 7.85" iPads in FQ1 (Dec. 2012) and 35.2 million in all of F2013."

The launch of the mini would eat into projected sales of the iPad, with Hargreaves cutting its estimates down from 91.6 million units to 65.2 million units in fiscal 2013.

Hargreaves suggests that Apple will cease production of its $399 iPad 2, replacing it with a 16GB iPad mini at a similar price. An October refresh of the new iPad is also expected, offering a lighter battery, oxide TFT screen and new camera location.

Via cnet