Microsoft is apparently working on new Surface tablets, including a smaller 7-inch device. The market has responded positively to 7-inchers in recent months, so Redmond’s decision comes as no surprise.

The Wall Street Journal claims the Surface 7 will enter production later this year, but there is still no word on the spec. Microsoft recently expanded the Windows 8 specification to allow tablets in 1024x768, which doesn’t sound too encouraging.

Apparently Microsoft was forced to rethink its tablet strategy following the success of the iPad mini and Nexus 7. As usual, Microsoft is late to the party. Shipments of Surface RT and Surface Pro tablets are already weak, return rates are high, along with the prices. A smaller version just promises to fail, er, 70 percent as hard as the 10-inch RT.