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Microsoft to launch smaller, low-cost Surface devices

Microsoft might try to tackle the low end of the PC market with a new low-cost Surface line-up. But the big question is: Why?

Video: What makes Microsoft's Surface devices special?

Microsoft looks poised to launch a new line of Surface devices with smaller screens and lower price tags.

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On May 16, Bloomberg reported that Microsoft is aiming to release Surface tablets priced at $400 in the second half of 2018. I'm hearing similar reports from a few different sources.

One of my contacts said Microsoft has been working on a low-end Surface device that would be priced at $399 without the separately-priced keyboard/cover. According to that contact, the device will be an Intel Core m device with 4GB of RAM and 64GB of storage.

Microsoft's Surface Pro (its most recent, fifth-generation device) comes with an Intel Core m3, 4GB of RAM, and 128GB SSD, and it currently sells for $799.

I've heard different things regarding possible screen sizes from my sources, with some saying the same as what Bloomberg is reporting -- that the screen size would be about 10 inches.

One of my contacts said that Microsoft is planning to announce at least one new low-end Surface device in July 2018. I've heard conflicting things as to whether Microsoft plans to brand these as Surface Pro devices or use another new Surface brand.

I asked Microsoft for comment on the low-end Surface hardware rumors. No word back so far. (Update: A spokesperson said the company had no comment.)

The biggest question about these new Surface devices is: Why. Why is Microsoft trying again, after its failure and subsequent $900 million write-down with Surface RT devices, to attack the low-end PC/tablet market?

The most obvious assumption is Microsoft is trying to take on the iPad after waging a campaign to go after Apple in the creator space with products like the Surface Studio and Surface Book.

But aren't Microsoft's PC partners already addressing this space? Microsoft officials have maintained the raison-d'etre for Surface is to establish new, untapped computing categories, not simply to make hardware for the sake of making hardware.

Read also: Inside Microsoft's Surface Laptop and Surface Pro

Microsoft OEMs have fielded a number of low-end, low-cost PCs that are meant to take on Chromebooks and iPads in the education market, in particular. Microsoft has been growing Windows' education share at Apple's expense in recent months. But in the US education market, Chromebooks still rule the roost.

I wonder whether these new low-end Surface devices might be aimed at the so-called "firstline worker" market instead/in addition to the education market.

Microsoft is looking for ways to expand its presence in this customer service/customer-facing segment and is counting on its Microsoft 365 F1 subscription bundle comprised of Windows 10, Office 365 and Enterprise Mobility + Security as the software/service piece of its strategy.

Perhaps Microsoft wants to show its PC partners a path to try to sell cheaper, lower end devices preloaded with its Microsoft 365 subscription bundle with a new low-end Surface line? This could be similar to the supposed reason Microsoft shipped a Surface laptop: To show its OEMs that they could make premium laptops that shipped with the locked-down Windows 10 S. However, Surface laptops haven't been runaway best sellers for the company.