Apple has forayed into the smaller tablet space with the unveiling of its iPad mini tablet that starts at $329. With the launch of the iPad mini, Apple has thrown the gauntlet to rivals and Wall Street analysts indicate that the Cupertino tech giant is on to yet another winner.

According to Shaw Wu, analyst with Sterne Agee, the release of the iPad mini will impact companies like Google and Amazon. Judging by the past, neither Google nor Amazon has been successful in thwarting competition from Apple in the "$400 and up" tablet market segment, and a strong likelihood exists that the companies would not be able to eat into Apple's share at the lower price point either.

Wu also said that Apple "has a strong track record in pricing to optimize volume and profits unlike most competitors who need to price low to have a fighting chance." Therefore, Wu is of the opinion that the iPad mini will compete aggressively with cheaper priced tablets and eat into their market share.

"We continue to believe the iPad mini is the competition's worst nightmare and likely to drive incremental volume," said Wu. "Many forget that $329 is still a more attractive price than $399 of iPad 2 and $499 of iPad. We believe some customers considering a Nexus 7 or Kindle Fire HD may consider iPad mini instead. Keep in mind that competitors have a tough time competing against higher priced iPads and we think iPad mini that is $70 less will make it even more difficult."

Additionally, Ming-Chi Kuo, an analyst with KGI Securities, had told investors in a note (prior to the iPad mini's launch, that the tablet would create new demand for smaller tablets. Kuo estimates that Apple has much to gain by releasing a tablet that fills the gap between the iPhone and iPad. Kuo is also of the opinion that Apple is "most concerned about competing ecosystems from Amazon and Android."

Wall Street analysts are also looking at favorable sales for the iPad mini. Chris Whitmore of Deutsche Bank is optimistic of the device's sales and Deutsche Bank reiterated its price target of $850 for Apple stock.

"Due to the high quality of the hardware, we expect the device will be very well received by consumers once they have an opportunity to test it," said Whitmore.

Brian White, analyst with Topeka Capital Markets, said that the iPad mini was an "absolute homerun for Apple." Charlie Wolf with Needham & Company anticipates that the iPad mini will fuel growth in the tablet market and make it tough for competing devices in the smaller and budget-friendly market segment.

"Starting at $329, Apple left a modest price umbrella for competing 7-inch tablets," said Wolf. "However, none compare with this device, in our opinion, which is a fully featured iPad except for its size. All 275,000 iPad applications can run on it without modification."

With the pre-orders of the white iPad mini selling out within a short time, it seems Apple is on song to stake its claim in the smaller tablet segment and become the competition's worst nightmare. However, time will tell if the company will dominate this tablet market segment as well.