According to some sources today, Microsoft might be making a 7-inch Surface tablet. This may sound logical since the competitors (Apple, Android) are already making smaller devices, and most importantly, the consumers are not rejecting them.

According to WSJ (Wall Street Journal), the 7-inch tablet might go into production later this year. Microsoft did not reveal or admit to the rumors (as of this writing) but in my opinion, it will be a missed opportunity if they don’t go into this direction.
Look at Apple iPad mini, Samsung 7-inch++ tablet and the recent GALAXY Note 8.0. I am sure many are willing to buy them. So, lets wait a little while longer for more updates.
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