Scott Moritz of The Street reported yesterday that Apple would release a larger version of iPod touch that features 9-inch to 10-inch touchscreen and possibly a keyboard by holidays this year. Verizon will subsidize the device, but Apple and Verizon “Won’t be as tightly integrated” as Apple’s iPhone exclusivity deal with AT&T.  He further added that Apple has been developing the device for more than two years, but has been reluctant to introduce the device, which has been ready as a prototype for nearly a year. Scott says that the device will have premium price tag and Verizon will pick up part of the cost to reduce initial sticker shock.

The above rumors corroborates to the news that Apple has started working with Foxconn, Wintek and Dynapack for manufacturing a tablet that will have 9.7-inch touchscreen and will be priced around $800.

In related news, our source says that the work on the device is almost complete and it can hit the market as early as October. According to the same source, Apple has designed the device to be less than half inch thick and there will be more than one model of the device mainly based on the storage capacity, which will be greater than 32GB. One thing our sources are sure about is that the device won’t be just larger version of iPod touch.

With more and more news coming in about the upcoming tablet, it looks like Apple is almost ready to announce the device very soon. If Apple announces the device before holiday season it could have a positive effect on already booming Apple’s balance sheet.