The Wall Street Journal reports that a new lineup of Surface tablets is in the works from Microsoft, including a 7-inch version. It's not yet clear what form the new Surface might take, but the Journal claims the 7-inch model will go into mass production later this year. The news follows Microsoft's recent adjustment of the Windows 8 specification to allow for smaller tablets with a 1024 x 768 resolution. The Verge also understands that Redmond has begun work on a 7-inch tablet under the Xbox brand, although the Journal's report doesn't mention gaming.

According to one of the Journal's sources, Microsoft only recently decided to move forward with a smaller tablet in response to products such as the iPad mini and Nexus 7 — it reportedly wasn't part of the company's strategy last year. The rumor comes amid more gloomy news for the traditional PC industry, with IDC finding sales down 13.9 percent across the globe. Despite modest sales so far, it could be that Microsoft has decided Surface is the future of the company.