Photo: The Canadian Press. All rights reserved.

Phil Schiller, Apple's senior vice president of worldwide product marketing, introduces the iPad Mini in San Jose, Calif., Tuesday, Oct. 23, 2012. (AP Photo/Marcio Jose Sanchez)

Apple Inc. is refusing to stoop to the level of its rivals in the tablet market, it's pricing its new, smaller iPad well above the competition.

On Tuesday, the company revealed the iPad Mini, with a screen that's about two-thirds the size of the full-size model, and said it will cost $329 and up.

Apple starts taking orders for the new model on Friday Oct. 26, said marketing chief Phil Schiller at an event in San Jose, Calif. Wi-Fi-only models on Nov. 2. Later, the company will add models capable of accessing "LTE" wireless data networks.

The price fits into the Apple product lineup between the iPad 2 at $399 and the latest version of the iPod touch at $299. But company watchers had been expecting Apple to price the iPad Mini at $250 to $300 to counter the threat of less expensive tablets like Amazon.com Inc.'s Kindle Fire, which starts at $159.

Apple shares fell $14.83, or 2.3 per cent, to $619.20 when the price was announced. Shares of Amazon.com Inc. were down 12 cents, or less than 0.1 per cent, at $233.66 while the rest of the stock market was in retreat.

The iPad mini weighs 0.68 pounds, half as much as the full-size iPad, and is as thin as a pencil, Schiller said.

The screen resolution is 1024 by 768 pixels, the same as the iPad 2 and a quarter of the resolution of the third-generation iPad. Like the iPad and iPhone, it was two cameras, one on the front and one on the back.

"It's not just a shrunken-down iPad, it's an entirely new design," Schiller said.