By Quentin Fottrell

Smartphones are getting bigger while tablet computers are getting smaller. In the future, analysts say consumers may end up buying a hybrid of the two.

Apple is testing a shrunken-down iPad, offering an 8-inch screen compared to the popular tablet’s 9.7-inch display, The Wall Street Journal reports. A move to create tablet devices of varying sizes would make sense for Apple, particularly with the increasingly diverse army of tablets on offer from other manufacturers, experts say. Scott Sutherland, a senior analyst with Wedbush Securities, says Apple rivals like Samsung provide one of the best range of devices from a small screen feature phone to large TVs. The Galaxy Nexus has a bigger screen than the iPhone.

Some analysts say that the gap is closing between the e-reader, tablet and Smartphone toward a hybrid: a larger phone/smaller tablet that does the work of all three. “It’s a natural progression,” says Peter Wahlstrom, senior analyst with Morningstar research. He says the success of Amazon’s Kindle Fire and, to a lesser extent, Barnes & Noble’s Nook tablet shows there is a market for smaller device – but with more iPad-like features. He says that the perfect crossover between the two has yet to be mastered. “I don’t think consumers are pleased with what’s on the market,” he says. “Companies are looking to fill the right space.”

Samsung’s new Galaxy Note is already leading the pack, Wahlstrom says: “It’s blurring the line between the tablet and phone.” Officially a Smartphone, the $299 Galaxy Note has a 5.3-inch screen but is cheaper than the iPad 2, which starts at $499. The downside for Wi-Fi-only tablet-lovers: the Galaxy Note comes with a two-year contract on AT&T’s 4G network. The upside: it’s bigger for the iPhone and Samsung’s previous Smartphone offerings. Already, however, not all consumers are happy. “Too big. No thanks,” says one online comment, “4.3 inches is enough for me.” Ryan Bidan, director of product marketing at Samsung Mobile, says the Galaxy Note is a “superphone” combining the pocketability of a Smartphone with the larger screen of a tablet.

Not all experts are convinced that there will be a perfect hybrid, either. Allyson Kazmucha, president of PXLFIX and writer at MobileNation, does not believe Apple will create a device that falls exactly half-way between the iPhone and iPad. “A tablet is supposed to be a significant step up from a smartphone,” she says. “It’s a middle ground between a smartphone and a personal computer. Blurring those lines will only confuse consumers, not help them.” Others say there will be a broader range of devices for all tastes and uses – and Apple will go head-to-head with Android market and play a bigger part. “I think we will see a range of hybrids for different situations,” Sutherland says.