Microsoft is expected to respond to weak demand for its Windows RT line of tablets by cutting prices on software for its small-screen tablets as hardware makers have avoided the devices, according to reports. HTC last week abandoned plans to make a full-size tablet with Windows RT. Microsoft, which reportedly wants to offer 8-inch tablets for $199, has also discounted wholesale prices of its Office software to tablet and PC makers as computer makers and Intel fight slumping sales. Acer stepped up its tablet efforts today by announcing the $379 Iconia W3 -- with Office installed -- which the vendor calls the first 8-inch Windows 8 tablet. Acer also disclosed that it will release the Liquid S1, a 5.7-inch Android 4.2 smartphone, in the third quarter.