Microsoft executives decided not to release a Surface Mini at its New York event on Tuesday because they didn't think the product would be a hit.
Microsoft CEO Satya Nadella and EVP Stephen Elop spiked the launch of the smaller Surface because they felt there wasn't enough to differentiate it from competing devices, sources told Bloomberg.
Panay claimed that 96 per cent of iPad owners also have a laptop.
Panos Panay, VP of the Surface division, confirmed that Microsoft was working on smaller devices but declined to go into further details after the event.
Sub-8in tablets such as the iPad mini, Nexus 7 and Kindle Fire have been flying off the shelves, making up over 50 per cent of tablet sales in the first quarter, according to IDC.
At present Microsoft is trying to gain traction in the tablet market by providing users with an all-in-one device.
The 12in Surface Pro 3, running on Intel's Haswell chipset, is being positioned as a device that can act as both a laptop and tablet. Microsoft was keen to highlight it as a challenger to the MacBook Air, with Panay claiming it has the power and performance to "replace your laptop".
