Looking to capture market share, Apple (AAPL) is reportedly testing a new tablet device that will feature a smaller screen.

According to The Wall Street Journal, Apple has shown component suppliers in Asia blueprints for a new device with a screen size of about 8 inches, compared with the 9.7-inch screen that the iPad 2 sports.

The smaller tablet will have a similar screen resolution as the iPad 2, the paper reported. Apple is working with a number of screen makers, including South Korea’s LG Display (LPL) and Taiwan’s AU Optronics.

It's not clear what the new device would be called. 

If Apple does go forward with the device, the company may be adopting its iPod strategy, which included selling the music-playing device in a number of shapes and sizes. By contrast, Cupertino, Calif.-based Apple has released the blockbuster iPhone device one design at a time.

The smaller screen tablet could allow Apple, which last week saw its shares cruise past $500 a share for the first time ever, to better compete against products offered by Amazon.com (AMZN) and Samsung.

Last month Apple reported record quarterly shipments of iPads, however the device’s share of global tablet shipments slipped in the third quarter to 61.5% from 68.3% in the second quarter, according to researcher IDC.

Meanwhile, Apple is preparing to unveil in March the iPad 3, which will feature a higher resolution screen that will be the same size as its predecessor, the Journal reported.

Shares of Apple rose 0.2% to $503.50 ahead of the opening bell on Tuesday, giving them a chance to build on their 2012 surge of 24%.

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