The device will launch this year and will compete against the iPad Mini, the Google Nexus 7 and Amazon's Kindle Fire HD.
Besides the new tablet, Microsoft is also expected to drop the price of its existing Surface devices and flagship software.
Microsoft did not initially plan to offer a smaller device, but the huge success of the iPad Mini forced the company to change their mind.
Tablets are becoming increasingly important for manufacturers, as PC sales have fallen off a cliff in recent months. In fact, the Q1 saw a 14 percent dive year-over-year, the worst quarter in history thanks in part to slow sales of Windows 8.
Besides the new tablet, Microsoft is also expected to drop the price of its existing Surface devices and flagship software.
Microsoft did not initially plan to offer a smaller device, but the huge success of the iPad Mini forced the company to change their mind.
Tablets are becoming increasingly important for manufacturers, as PC sales have fallen off a cliff in recent months. In fact, the Q1 saw a 14 percent dive year-over-year, the worst quarter in history thanks in part to slow sales of Windows 8.