Amazon.com (AMZN) and Barnes & Noble (BKS) are retreating ahead of the expected unveiling of a smaller iPad by Apple (AAPL) at its event tomorrow. According to Bloomberg, the screen on Apple's smaller iPad will be 7.85 inches diagonally. Both Amazon and Barnes & Noble sell devices that have seven inch screens. Meanwhile, MacRumors quoted French website igen.fr as saying that Apple is looking to launch a new version of its iBooks that will make Apple devices compatible with the latest version of EPUB, a widely accepted standard for digital publications. Moreover, Bloomberg reported that a growing number of school districts are buying iPads for students. The expected lower price point of the smaller iPad could make that device even more attractive to schools, the news service stated. Both Amazon.com and Barnes & Noble sell digital textbooks, as well as conventional textbooks. A significant increase in the popularity of the iPad among schools could bring added competition to both companies. In mid-afternoon trading, Amazon.com fell $6.22, or 2.59%, to $233.78, while Barnes & Noble dropped 46c, or 3.07%, to $14.54 and Apple climbed $13.44, or 2.20%, to $623.28.