Earlier this month, it was rumored that Microsoft was working on a 7-inch Windows 8 tablet. The news came after Microsoft changed up its rules reducing the minimum resolution for a Windows 8 device to 1024×768. Now the company has confirmed that it is indeed working on a smaller tablet.

During its earnings call yesterday, outgoing Microsoft CFO Peter Klein said that smaller Windows 8 devices are on the way. We can assume that he means that Microsoft itself is working on a cheaper, smaller Surface tablet, but don’t be surprised if Microsoft’s partners also announce smaller tablets.

As I’ve said before, smaller tablets may be key to a Windows 8 revival. The touch-friendly OS and Microsoft’s Surface tablets haven’t exactly been flying off store shelves. One of the major reasons is the high cost as the base Surface RT retails for $499. A seven-inch tablet would lower the price barrier for consumers interested in Windows 8 hardware, but were turned off by the high price of entry.

Of course, we have no idea when Microsoft or its partners will release these smaller Windows 8 tablets. A good bet is the latter half of this year as Windows Blue, or Windows 8.1, will be launching around that time. Microsoft is rumored to be completely revamping its marketing with Windows Blue and a cheap seven-inch tablet would fit nicely with marketing that extols an even friendlier Windows 8 experience on desktop and mobile.

Microsoft’s BUILD conference will be held in June of this year, and the company will also have a large presence at E3. While the latter will be mostly focused on the next Xbox, it wouldn’t be an entirely bad idea for Microsoft to show off a smaller Surface that can act as a controller for the company’s next game console.

[h/t: GottaBeMobile]