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Windows Blue could launch on cut-price 7in Surface tablets

Rumours that Microsoft is looking to enter the increasingly lucrative 7in tablet market have been renewed this week, with sources suggesting that the devices could launch later this year for as little as $199 (around £132 excluding taxes.)

Currently, Microsoft's Surface RT and Surface Pro tablets are not selling all that well: while the company has managed to shift 1.5 million units, of which 400,000 are the higher-priced Surface Pro currently exclusive to North America, that is far short of the three million it was expected to have sold in its first few months. One of the biggest reasons, it would appear, is price: compared to rival Android tablets like the Nexus 7, Microsoft's tablets are priced towards the very top end of the market.

While the Surface Pro may have an excuse - unlike the Surface RT or the Nexus 7, the Surface Pro is a fully-fledged computer running Windows 8 on an Intel processor just like a laptop or desktop - the high price of Surface RT is harder to ignore, even given its large 10.6in touch-screen display.

This could be why Microsoft is looking to shrink its devices down to the 7in form factor - a move which has proven a huge success for Apple with the iPad Mini and upcoming iPad Mini 2. According to PCMag, the launch of Windows Blue - an updated operating system designed to fix many of the inconsistencies of Windows 8 - will bring with it a selection of 7in tablets priced as low as $199 to $349 (around £132 to £231 excluding taxes) - bringing the devices closer to the cut-price level of the Android tablets against which Microsoft is struggling to compete.

At that price point, the devices would likely include slower processors and the Windows Blue equivalent of the current cut-down Windows RT operating system, but that may not matter: with Windows 8 likely to have become a familiar site for users by the time Windows Blue launches later this year, the tile-based user interface coupled with a lower price point and more pocketable design could well help Microsoft to tempt buyers away from rival tablet devices.

Microsoft, for its part, has refused to comment on rumour or speculation regarding unannounced devices.

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