Microsoft will put a smaller, 7-inch Windows 8-powered Surface laptop-cum-tablet into production this year, according to insiders.
Shrinking the touchscreen slab wasn't part of Microsoft's strategy when the then-Windows chief Steven Sinofsky unveiled Redmond's own 12-inch Surfaces and similar-sized Windows 8 devices from PC manufacturers.
However, the software giant has noticed the growing popularity of smaller tabs - such as the 7-inch iPad Mini and Google Nexus - and has shouldered some of the blame for a disastrous first-quarter of global PC sales: its Windows 8 gear as it stands just isn't attractive enough, so something has to give.
Microsoft was unable to comment at time of writing.
If rumours of the 7-inch Surface are on the money, it raises a number of interesting questions. Microsoft may have to double down on the compact and battery-friendly processor architecture ARM - the family of cores used in its 12-inch Surface RT. Microsoft does have a 12-inch Intel-powered slab - the Surface Pro - but this is fatter, slightly heavier and has worse battery life compared to Surface RT.
Unless a radical redesign emerges on the Intel side, Microsoft will want to put ARM cores in the smaller Surface for the sake of expediency - if it wants to hit mass volume this year.
Going with ARM, however, comes with a major handicap: a lack of apps. At least on the Intel-powered slabtops, existing x86-compatible software can be installed and run. Windows 8 on ARM is so new, however, there's a paucity of programs for punters.
And that will be a big consideration if, as is expected, Microsoft wants 7-inch Surfaces ready to ship in time for Christmas, traditionally the biggest booster to gadget sales. Relatively few Windows 8 computers were sold during the 2012 festive shopping spree, and Redmond will not want a repeat of that.
The Surface Pro reportedly sold out, but it was only because initial production numbers were rather low. Computer makers, meanwhile, have been happily selling PCs running Windows 7.
The whole episode has resulted in a circular blame game: Microsoft accused PC manufacturers of making undesirable machines, and the factories said Microsoft cocked up the design of Windows 8 and confused consumers by launching its own Surface hardware.
According to IDC's number crunchers, the first three months of 2013 was the worst quarter for sales of PCs since it started tracking shipments in 1994.
Sales fell 13.9 per cent year on year, nearly double the expected drop, and bean counters IDC reckoned Windows 8 may have made things worse thanks to its touch-drive Metro user interface, a radical step away from the traditional Windows desktop.
"It seems clear that the Windows 8 launch not only failed to provide a positive boost to the PC market, but appears to have slowed the market," IDC program vice-president for clients and displays Bob O'Donnell said in a statement.
"While some consumers appreciate the new form factors and touch capabilities of Windows 8, the radical changes to the user interface, removal of the familiar Start button, and the costs associated with touch have made PCs a less attractive alternative to dedicated tablets and other competitive devices. Microsoft will have to make some very tough decisions moving forward if it wants to help reinvigorate the PC market." ®