A recent report seemed to suggest that Microsoft purposeful backed away from plans to debut a smaller Surface device. The report appears to be imply that the device was based on ARM processor which would indicate again the shaky ground RT devices find themselves invested on.
Once Microsoft got past it initially confusing messages about the Surface line, the clear and strong copy became “…Surface is the most productive tablet in the market”. Producing an 8 inch ARM based device could only diffuse the efficacy of that message as both the lack of Windows Store apps and the lack of a real desktop would run in direct conflict with that idea.
Bottom line, Windows on ARM cannot currently compete with the iPad mini or premium Android devices, OEMs know this, and now Microsoft has tacitly acknowledged it. My advice, if you want a small tablet device that also runs productivity apps (including Microsoft Office, RDP, Lync), the iPad mini is simply the best device on the market.