Could we see a 7-inch "mini" version of Microsoft's first ever tablet, the 10-inch Surface RT? The early success and user enthusiasm for the Surface RT may have Microsoft taking a harder look at replicating those numbers in the 7-inch tablet market. Numerous publications are reporting Microsoft is currently making a smaller tablet under the Surface brand. 

Microsoft Surface Tablet: Does the Touch Cover Really Have a Crucial Defect? 

Microsoft is planning to release a 7-inch tablet under its Surface brand, a device that could go head-to-head with the iPad mini in a growing segment that lies between smartphones and full-sized tablets, according to a report from tech website The Verge.

According to The Verge, the tablet is being produced at Microsoft facilities in California. It's said to carry a customized version of Windows and is powered by an ARM SoC (system-on-a-chip) processor. It might also carry Microsoft's Xbox brand, making it a hub for personal gaming, social networking and entertainment.

Microsoft has not commented on the report. "We don't comment on rumors or speculation," said a company representative who spoke to The Verge.

If the report is accurate, the move would be consistent with other recent activity at Microsoft. Last month the company introduced Surface RT, its first entry into the PC hardware business. Surface RT runs a version of Windows 8, Windows RT, that is restricted to running Metro-style apps available only from the company's online Windows Store. The device starts at $499, the same entry point for Apple's new iPad 4.

Microsoft plans to ship a more fleshed out version, Surface Pro, in January 2013. It will run Windows 8 Professional on x86 chips and will be compatible with the full suite of Windows legacy applications.

If the 7-inch tablet is co-branded with Xbox, it's likely the device would follow its larger brother, the recently launched Surface RT, which features a 10-inch display and runs a stripped-down version of Windows called Windows RT. The Xbox Surface would reportedly run on its own version of Windows as well.

An Xbox Surface would follow up to perhaps the hottest brand Microsoft owns. The Xbox 360, with the added innovation of its Kinect motion-sensing device, remains a powerhouse in the video game industry and continues to be a draw for consumers. The 7-inch tablet would also be consistent with CEO Steve Ballmer's letter to investors earlier in 2012 than company was in the midst of a transformation into a company that does hardware just as much and as well as software. A concept perfectly illustrated by the Surface tablet.

"This is a significant shift, both in what we do and how we see ourselves - as a devices and services company," wrote Ballmer in the letter.

"It impacts how we run the company, how we develop new experiences, and how we take products to market for both consumers and businesses. The work we have accomplished in the past year and the roadmap in front of us brings this to life," Ballmer said.

We first began hearing whispers of a Surface gaming tablet from Microsoft back in June.

ZDNet reported in October about the possibility of an Xbox Surface, saying it could be Microsoft's first entry into the 7-inch mini-tablet segment.

"A tablet could take advantage of the move by consumers to mobile games played on smartphones and tablets, which have steadily taken market share away from the traditional video game consoles," said CNET.

The Xbox Surface gaming tablet would likely include a custom ARM processor -- the same kind used in other tablets and smartphones -- and more RAM to handle more intense games, The Verge reported. Specifications could be changed to include an Intel system-on-a-chip processor instead, the website noted.

According to The Verge, Microsoft is developing at least part of the Xbox Surface in the company's offices in Silicon Valley, adding that the offices have recently been locked down, most likely for increased security as the company begins intensely testing the tablet.

Microsoft is also said to be working on its own version of a Windows Phone 8 smartphone that would compete with products sold by its existing partners, such as Nokia and Samsung.

Citing unidentified sources, The Wall Street Journal said the company is testing prototypes with Asian component suppliers.

The newspaper's sources said the device would feature a screen measuring between 4 and 5 inches diagonally. That would put it somewhere between Apple's new iPhone 5 and the larger Samsung Galaxy S III.

The report contradicts statements that a Microsoft executive made to InformationWeek earlier this year. Asked if the company planned to make its own phones, Greg Sullivan, senior marketing manager for Windows Phone, said, "No, we do not." Hardware makers building Windows Phone 8 devices include HTC, Nokia and Samsung.

"We have a strong ecosystem of partners that we are very satisfied with," Sullivan said in an interview, in July.

Microsoft's hardware ambitions aren't sitting well with all of its PC- and phone-building partners. Lingxian Lang, China operations manager for Acer, reportedly said that Microsoft's plan to compete with partners would ultimately see it eating "hard rice."

But with the growing abundance of free software that competes with Microsoft's paid offerings, from Google's Android operating system to IBM's Lotus Symphony suite of productivity apps, the company may have little choice but to enter the hardware business in a bigger way.

Microsoft Surface tablet features

The RT sports a 1366x768 HD screen, while the PRO has a 10.6-inch Clear type Full HD (1920 x 1080) screen with 16:9 widescreen.

That means they are among the biggest tablets in the market. If you are not satisfied with the typical 10.1-inch tablet, you can go for the Surface tablet. Along with the touch keyboards with the device, you can turn the machine to a small notebook.

The Surface tablet comes with five Touch Covers. Different from typical keyboards, the Surface keypads provide a smoother typing experience thanks to their touch-based surface.

The Surface tablets mount both front and rear cameras. The front camera, named life cam by Microsoft, makes the tablet ideal for video chatting through Skype or other services. Using the rear camera, you can capture images and video clips.

Microsoft puts forward better memory options with the Surface tablets. The device comes in 32GB, 64GB and 128GB options. The 128GB is available only with Surface Pro. Further, you can expand the memory using external memory sticks thanks to microSD card slot. That is, you can store enough data including music, software items and video in external clips.

The 3mm Touch Cover can be connected to your Surface tablet with a single magnetic click, so, now you can type text and send messages quite easily.

The Surface's tablet housing features a revolutionary kickstand. Along with fully functioning keyboard and track-pad, the integrated kickstand helps you place the gadget in both portrait or landscape modes.

According to Bloomberg, Surface will only be able to go online using a short-range Wi-Fi connection. This is a stark contrast to Apple's iPad 3, which has a 3G option, and a faster LTE connection.