The first wave of Windows 8.1 7- and 8-inch tablets washed over Computex in Taiwan last week. Up until now, all Windows 8 tablets had measured 10 inches or larger. This is despite the fact that the smaller tablet segment of the market is on fire; estimates suggest as much as 65 percent of all tablets sold worldwide by the end of 2013 will fall into this category.

Acer led the pack with an impressive 8-inch version, the Iconia W3 (pictured). It has an MSRP of $379, which is $30 above the entry level iPad mini, but in retail it will probably cost less than the iPad mini. This is important because Acer is beating all of its competitors to market with a small Windows 8 tablet, a tablet size that is just now becoming available thanks to Windows 8.1.

Computex also marked Intel’s public release of Haswell. This is its new low-powered processor designed for all types of mobile devices that today are dominated by ARM chips and a variety of new hybrid and convertible designs as well as the new Atom and Temash touch-based notebooks under $500. AMD didn’t sit back either; it launched its next generation of mobile chips with stellar graphics.

While most analysts believe Haswell will seriously challenge the ARM crowd, it is way too early to tell how well it will do. Haswell delivers much lower voltage and great graphics, but Nvidia and Qualcomm chips will always cost less than Intel’s if Haswell’s price is consistent with traditional Intel prices. The good news for Intel is that it is starting to win some tablet bids, such as Samsung’s new 10.1-inch Galaxy Tab 3. I suspect that Dell, HP, and Lenovo will eventually have Haswell in some of their larger tablets too as they target the enterprise where some might want backward compatibility with existing Windows apps.

Microsoft has its work cut out for it given the competition. Right off the bat, the Windows tax already hinders its partners since Android is free. And unless Intel is priced competitively with the ARM vendors, this too could impact any vendor’s ability to create a low-cost, small tablet to oppose Amazon and those targeting the real low-end of the tablet market.

Another issue that could possibly hamper the success of Windows 8.1 on any tablets is the absence of what some call “long tail apps,” or apps that people also have on their iOS and Android devices. For example, many soccer moms are tied together through an iOS app that helps them manage their kids’ schedules around practices, games, and carpooling. That same app may be available on Android but it’s not likely on Windows 8 for tablets. And there are thousands of long tail examples of content where this plays out with consumers, many who take these to work via a BYOD program.

My company has been talking with software developers and their development strategy is iOS first, followed by Android. We have found very few that are even considering putting long tail apps on Windows 8 for now. When we talk to VCs who are backing tablet software projects, they tell us they are only funding iOS development. If it makes sense and they think the company could make money with an Android version, only then will they green-light those projects. But as of now, Windows 8 apps for tablets are not even on their radar.

We could see some substantial uptake in larger Windows tablets within IT where backward compatibility with corporate written apps on Windows is still important, but I fear that Windows for smaller tablets is just too late to the party. Sources say that by CES 2014 we will see many $99 Android tablets based on ARM. Amazon and Barnes & Noble will probably also have smaller HD tablets as low as $139 or $149 by the holidays. With the Windows tax on small tablets there is no way small Windows 8 tablets will hit these prices, though I’ve heard they might drop below $300 by the third quarter.

Apple and others may continue to make more souped up small tablets with more memory and better graphics but the lack of software, especially long tail software, could keep the demand for smaller Windows tablets at bay even if priced under $300.