Software giant Microsoft is working with manufacturers to produce a line of small touch-screen devices powered by Windows.
Peter Klein, Microsoft's chief financial officer, told investors and analysts on a conference call that the new devices will be available in coming months at competitive prices.
The new device is apparently intended to compete with 7-inch tablets like the iPad Mini and Amazon Kindle Fire, Fox News reports.
According to the report, Microsoft is trying hard to extend its software into smartphones and tablets as consumers are turning away from PCs, the foundation of its empire.
The firm had earlier launched two larger tablets under the Surface brand.
In October, the company took a large stake in Barnes and Noble's digital unit, which sells a line of entertainment-oriented 7-inch tablets under the Nook brand.