Analysis: Microsoft is Scaling Back on Windows Phone Dramatically - Thurrott.com. I agree with Paul, and I suspect Windows Phone will be no more in two years. Microsoft is returning to its roots of being a software company, and I think it sees itself becoming more of a productivity and business software company than a platform company. A productivity and business software company doesn't need an operating system, it needs to create great software that runs on whatever is the popular operating systems currently available. In the phone space, it will focus on creating great software for iOS and Android, which are the defacto phone standards.
The time for Microsoft to push for a smartphone operating system was 2007-2009, and it failed miserably executing at that time. In hindsight, Microsoft's greatest failure was their obsession with making Windows work on phones rather than making the best smartphone/small touchscreen operating system. Microsoft's other failure was fixating on Blackberry's keyboard and not anticipating the success of capacitive touchscreens.
Microsoft's failure in Windows Phone/Pocket PC/Windows CE ought to be fodder for business schools. At the heart of it, in my opinion, is a company losing its identity and seeing its entire future tied to a brand rather than recognizing it needs to continually reinvent itself to survive. You might say it started with the success of Windows 95, where Microsoft stopped seeing itself as a software company and started seeing itself as the Windows company.
Contrast Microsoft from the mid-90s to now with Apple. During that time Microsoft stubbornly committed to Windows everywhere, where Apple Computer, the company that made and sold computers, became Apple, the company that aspires to make the products that will change the world. Fundamentally, what you see is a failure in leadership that you have to lie squarely at the feet of Steve Ballmer and Bill Gates, both of whom couldn't see themselves beyond Windows. Come to think about it, the whole antitrust trial probably should have been a big red flag of how far Microsoft had gone off the rails.