Microsoft is said to be planning a 7-inch version of its Surface tablet to help it compete with similar size devices from Apple and Google.
The 7-inch version, which will go into mass production later this year, is part of a new lineup of Surface tablets planned by Microsoft, reported The Wall Street Journal on Thursday, citing people familiar with the company's plans.
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The Redmond, Washington, software giant decided to get into 7-inch tablets to counter the iPad mini from Apple which has a 7.9-inch display and the Google Nexus 7 with a 7-inch display, according to the report. The company also plans cuts in the prices of its Windows and Office software to give a boost to sales of lower-cost touch-screen devices running Windows software.
Microsoft continues to test its own smartphone, although it isn't clear whether it will bring such a device to market, component suppliers told the newspaper.
The company could not be immediately reached for comment.
Microsoft started shipping in October its 10.6-inch Surface RT tablet, running on an ARM processor and the Windows RT operating system, to the dismay of some partners who were used to dealing with Microsoft as a supplier of software, rather than as a competitor in the computing devices market. The company also began shipments this year of the Surface Pro running an Intel processor.
IDC said in January that Microsoft needed to quickly adjust to the market realities of smaller screens and lower prices in the tablet market. The company entered the market during the fourth quarter with its Surface with Windows RT tablet, but failed to reach the top five among tablet vendors after shipping a little less than 900,000 units into the channel, the research firm said.
DisplaySearch analyst David Hsieh wrote in a blog post in February that in the first month of this year, there was a dramatic shift towards smaller screen sizes in tablets as the devices are cheaper and can be held in one hand instead of two.
Microsoft finds itself increasingly threatened in its PC business. The future of PCs is being questioned as users move to alternative computing devices such as tablets and smartphones, IDC said Wednesday while reporting that first quarter PC shipments totaled 76.3 million units, down 13.9 percent compared to the same quarter last year.
The decline was worse than the 7.7 percent previously forecast by the analyst firm, and the market could be headed into further contraction. Microsoft's Windows 8 did not help PC shipments grow, as fewer consumers are upgrading PCs to Windows 8, and businesses are largely sticking with Windows 7, IDC analysts said.