[ap3]

I think the market for the mini is huge, specially around the holidays. Not everyone will pay the premium, but Apple doesn't need to get all of them.

As you said if it's only previous iPad or iPhone users there are a lot of those.

What about people with small hands ? Maybe you hand your kid a $329 device that fits his hands instead of a $500 that's too big ?

Getting and ipod touch for your kid ? Bump him up to a tablet ( if he doesn't take it to school everyday )

People that like the kindle form factor will also be tempted.