Updated from May 15 to include more information on the event.

NEW YORK (TheStreet) -- Microsoft (MSFT) - Get Microsoft Corporation (MSFT) Report is hosting an event later today in New York related to the Surface tablet, and while there hasn't been much in the way of leaks and details, there's talk that the tech giant could launch another iPad competitor as it continues to grow under new CEO Satya Nadella.

Talk last week centered around a Surface-mini tablet, with analysts noting the device could help Microsoft's nascent tablet market share. FBR Capital Markets analyst Dan Ives, who rates shares "market perform" with a $43 price target, believes that a Surface-mini would allow Microsoft to compete in the tablet space alongside the likes of Apple (AAPL) - Get Apple Inc. (AAPL) Report and Samsung, as the PC market stays weak.

"We believe rolling out a smaller form factor for the Surface will be an uphill battle versus the likes of Samsung and Apple, as Microsoft has been late to the game on the tablet front, and Surface's impact has been underwhelming thus far," Ives wrote in the note. "That said, we believe Nadella continues to lay the seeds for growth, and we look forward to hearing more details around Microsoft's tablet offerings at the event."

Microsoft shares were lower in Tuesday trading, falling 0.38% to $39.60.

Ives stated that investors will be looking to see how the Surface relates to the company's cloud and mobile strategy, particularly getting the company's core enterprise software, Microsoft Office and subsequently Office 365, in the hands of more users. "Overall, we believe the Nadella era is off to a golden start with his Office for iPad announcement, improved transparency, and strategic focus on the cloud. While gaining share on the tablet market continues to be a 'prove-me' situation, the Street (including ourselves) has become incrementally positive on Nadella's modus operandi around driving cloud/mobile growth outside the challenged PC arena."

Nadella announced Office for iPad at an event in San Francisco in late March. Since then, select Office apps have been among the top free apps on the App Store. Currently, Microsoft Word for iPad is the No. 2 free app on the App Store, while Excel is No. 13 and Powerpoint is No. 16. In the productivity category on the App Store, Word is No. 1, while Excel and Powerpoint are No. 3 and No. 4, respectively.

In recent days, talk has moved away from a Surface-mini tablet, with Microsoft expected to announce a larger Surface. Currently, the Surface 2 has a 10.6-inch high-definition screen featuring a resolution of 1920 x 1080, and runs on an Nvidia (NVDA) - Get NVIDIA Corporation Report Tegra 4 processor. Despite all of these features and more, Nomura analyst Rick Sherlund believes Microsoft has had limited success with the Surface because of limited hardware offerings. "We believe Microsoft has elegantly designed hardware, but the company does not have a focus on competing aggressively with its Windows OEM partners, does not have a conventional laptop or desktop, and does not have a small screen tablet/notebook or larger screen device," Sherlund wrote in a note. "The latter may be addressed at the Tuesday announcement."

In Microsoft's fiscal third-quarter, it generated approximately $500 million in Surface-related revenue, up 50% year-over-year.

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Sherlund estimates Microsoft has just 1% of the tablet market. Comparatively speaking, Apple still holds the lead, owning 32.5% of the tablet market, though that's down from 33.2% in the fourth quarter of 2013, according to IDC.

Aside from Office, the other big revenue driver for Microsoft is Windows, so Ives and investors will be looking to see whether Nadella has any comments on how to reinvigorate the Windows franchise, now that Microsoft has killed support for Microsoft XP, forcing consumers to upgrade.

"Reinvigorating the Windows franchise continues to be a key ingredient in Microsoft's recipe for success as it looks to offset headwinds from the secular challenges in the PC market, in our view," Ives said in a note. "That said, we believe investors remain laser-focused on any hints/previews around Windows 9, as Windows 8 (and subsequent updates) has struggled to gain significant traction for this high-margin business. With the recently announced offering of Windows for free on mobile devices (screens under nine inches), we believe Microsoft continues to look for ways to 'spread the gospel' around Windows on mobile while laying the groundwork for a flagship cloud-centric platform."

TheStreet will be attending the event later today.

Also See: Microsoft's Surface Mini May Give New Life to Windows RT

Also See: Microsoft Unveils Office for iPad

--Written by Chris Ciaccia in New York

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