It's rarely good news when a company decides to cancel a product, so the first reaction many would have to HTC canceling its plans for a large, 12-inch Windows RT tablet is that it's horrible news.

After all, Windows RT has been panned by many as diluting the Windows 8 brand and confusing potential customers. Many have called for the operating system to be killed off by Microsoft, and HTC's decision to abandon the software is just another nail in the coffin to many.

However, it's important to note that HTC is not completely abandoning Windows RT or Windows devices in general. Anonymous sources told Bloomberg that HTC is killing off the 12-inch Windows RT tablet because of "lackluster demand," but the company is still planning to release a new, 7-inch Windows RT slate later this year (probably running on Windows 8.1).

If Microsoft and OEMs play their cards right, it's a strategy that could make a lot of sense.

According to Bloomberg, "HTC is coping with a sales slide, market share declines and management turnover, prompting the company to be more selective with the products it brings to market. Microsoft's Windows RT sales have lagged since the product's October introduction, with just 200,000 tablets running the operating system sold in the first quarter."

This does sound like only bad news for HTC and Microsoft, but part of the reason Windows RT is suffering could be related to the type of hardware it's running on. And a 12-inch tablet isn't the way to get its sales going. In fact, it might be part of the problem.

We've written about this before, but if it's on the right hardware, an OS like Windows RT could be a great choice for consumers. After all, it comes packing a free, built-in version of Microsoft Office. It may not run legacy apps, but it's a great choice for consumers who don't need the computing power and features of Windows 8 Pro.

With that in mind, the Windows RT would pair very well with smaller, cheaper tablets. Does anyone in the market for a 12-inch tablet really want the inferior version of Windows? Save the larger, more decked-out hardware for software that actually needs it (Windows 8 Pro), and leave the smaller, cheaper devices for Windows RT. This could also help solve the differentiation problem, since smaller tablets would run Windows RT with less features, while bigger, spec-heavy devices run Windows 8 Pro. That's a difference anyone can explain easily.

As Microsoft watcher Paul Thurrot wrote earlier in May, "[By] offering Windows RT only on these cheap, sub-$300 machines, Microsoft can feed the low-end of the product with something that is truly a new mobile OS, Windows RT, a product that I feel will (or at least should) shed its desktop underpinnings more aggressively than mainstream Windows."

"This is not the same thing. More to the point, it preserves the notion of 'real' Windows as a more premium product that runs on more powerful hardware and is, in fact, functionally superior. And backwards compatible. And yes, more expensive."

Clearly, HTC is in a precarious position these days concerning its sales, but that doesn't necessarily mean this decision is a sign of bad things ahead. When it comes to Windows RT, it and other companies should be more selective in terms of product decisions, and it's good to see HTC recognize this.