By AppleInsider Staff

Published: 05:05 PM EST (02:05 PM PST)

Apple chief executive Steve Jobs on Monday took pause during his company's fourth quarter conference call to extinguish rumors that the company is working on a smaller iPad based around a 7-inch screen.

"The reason we [won't] make a 7-inch tablet isn't because we don't want to hit that price point, it's because we think the screen is too small to express the software," Jobs said on Monday's quarterly earnings conference call. "As a software driven company we think about the software strategies first."

"We know developers aren't going to deal well with these different sizes and they have to change their software every time the screen size changes," he added. "When we make decisions on 7-inch tablets it's not about cost, it's about the value of the product when you factor in the software."

You see what I'm getting at?," Jobs continued. "So we're all about making the best products at aggressive prices and that's what we do, and that's what we will do with the iPad and iPod."

Asked by an analyst how he would respond -- and whether Apple would lose share -- if the market suddenly moves to a lower price point with fewer features, Jobs said "You're looking at it wrong, […] looking at it as a hardware manufacturer who doesn't know much about software who assumes the software will take care of itself."

"Hm, how can we make this cheaper?  Well let's put a smaller screen, slower processor, less memory, and you just assume the software will somehow come alive on this product but it won't," Jobs quipped. "Developers have taken advantage of faster processors and bigger screens to make better apps for customers." 

"It's a hard one," the Apple co-found said of such a strategy, "because it throws you in the chicken-and-egg question to change assumptions on developers." Most developers won't follow that lead, he suggest. Instead, they're more likely to say, "Sorry, I'm not going to write a watered down version of my app just because you can sell this version of your phone for $50 less."

Rumors of a 7-inch iPad have come from numerous publications, but were first dispersed by Taiwan's DigiTimes. In addition, other reports, largely from the Far East, have alleged that Apple is working on a smaller version of the iPad.

Those reports suggested that the current iPad is too heavy for users, and that a smaller form factor and lighter weight would be more ideal for reading.

Jobs' comments on Monday come as a number of competitors are embracing the 7-inch form factor with their own touchscreen tablets. Samsung's Galaxy Tab is set to launch this year with all four major U.S. wireless carriers, while BlackBerry plans to release its own PlayBook in early 2011.

Earlier this month, it was suggested that Apple developed a 7-inch iPad alongside the current model, but eventually opted just to release the current 9.7-inch model. Jobs' comments Monday would support that rumor, as the CEO noted that his company has done extensive research on touchscreen interfaces and what works best for users.

"We really understand this stuff," Jobs said.