Piper Jaffray analyst Gene Munster says in a note this morning that he still believes Apple will release a version of the iPad with a smaller screen. He thinks the smaller iPad will cost less than $300. (Munster doesn't speculate on a specific screen size, but seven inches seems to be the most likely number.)
From Munster's note, regarding Apple's tablet marketshare:
The reason we expect growth/share to accelerate in CY15 is that we believe the iPad will become more widespread as both an enterprise and education device. We believe enterprises and education institution adoption will be driven by employee and student pull for the device. In conjunction with our iPad unit growth totals, we assume ASPs on the device will decrease ~5% per year over the next four years given the strategy of selling past generation iPads at $399 and a smaller screen iPad below $300.
Keep in mind this is just speculation from Munster based on trends he's seeing in the tablet market. There are a bunch of 7-inch tablets out there now, including Amazon's popular Kindle Fire.