Apple Inc.'s expected announcement Tuesday of a new, smaller iPad is more than another buzzy product launch. It is a chance for the company to prove it is still ahead of the curve.

The offering stands to be the first new class of hardware Apple has introduced since the iPad went on sale in 2010. People familiar with the matter say the smaller tablet, whose name is unknown, will have a screen around 7.85 inches and look similar to the existing iPad. Apple is also expected to announce updates to other product lines, including computers, at an event in San Jose, Calif.

Such a device would competesquarely with devices like Amazon.com Inc.'s Kindle Fire and Google Inc.'s Nexus 7, already on the market. These and other roughly seven-inch devices from Samsung Electronics Co. and others will account for about a fifth of the tablet market this year, according to Piper Jaffray.

But the growing number of smaller tablets and the marketing muscle tech giants are putting behind them puts Apple in a defensive position. Some investors are wondering whether Apple is losing some of its edge as a trendsetter.

'The single biggest concern I hear is Apple has perhaps lost a step on the innovation front,' said Will Power, senior analyst with Robert W. Baird & Co. 'That is the secret sauce at Apple and if they don't stir that, that is going to create problems.

An Apple spokeswoman declined to comment on the competition.

Developers, designers and analysts say Apple has plenty of room to wow. Mark Rolston, chief creative officer for San Francisco-based design firm Frog Design Inc., said the first round of seven-inch tablets are 'pretty chunky' and focused on undercutting the iPad on price.

The Kindle Fire starts at $159 and the iPad's latest model starts at $499. Analysts estimate that the smaller iPad would sell well if priced around $200 or $250, according to several surveys.

Mr. Rolston said he doesn't 'think people will be that impressed' with the hardware of the new device. But he believes the device will sell due to Apple's focus on software and functionality and marketing.

'No one has really put a story behind it,' he said. 'They took the phone and made it bigger or the tablet and made it smaller and neither is really the right idea.'

Frog doesn't currently do business with Apple but helped design early Apple computers in the 1980s.

Neither Amazon nor Google disclosetablet sales figures. An Amazon spokesman said that the $199 Kindle Fire HD has been the best-selling product on Amazon since its launch this fall. A spokeswoman for Google declined to comment.

The new Apple tablet's biggest competition could be the original Apple iPad. The device, which has a screen length of 9.7 inches, has more than withstood the competition.

Apple's share of world-wide tablet shipments grew to 68% in the second quarter up from 63% in the first, according to IDC. Amazon's share rose to 5% from 3.9%.