Microsoft recently presented its current quarterly earnings report and de facto admitted: Windows 10 Mobile is dead. The operating system virtually plays zero role in the market, and that's not something Microsoft can or should brag about.
It's probably best to deal with this saga like a band-aid. Rip it off with one quick motion to minimize the pain. Microsoft is probably taking this philosophy to heart now, and looking to put end to the Windows 10 Mobile experiment. The current business figures show the whole extent of Microsoft's misery: Windows 10 Mobile and Windows Phone have contributed just about five million dollars to the company's finances - which, considering the size of Microsoft, is a joke. Two years ago, when the mobile division was already showing signs of decay, it had still contributed around 1.4 billion dollars.
Smartphones took a central role when Microsoft introduced its new strategy around Windows 10. A single Windows experience for all devices - from PC, tablets, smartphones, to the Xbox and IoT devices. This is what Microsoft wanted to achieve, but now it seems like they are further away from this goal than ever before. This isn't solely because of its declining relevance in the smartphone market, but also due to the fact that the IoT evolution is happening without Microsoft or Windows.
During an earnings call, Microsoft CFO Amy Hood acknowledged the decline of the mobile division and couldn't give a positive outlook for its future. Hood stated that there was "no phone revenue to speak of" and that there would be negligible revenue from phones in the next quarter. The Windows 10 mobile sector in its current form is history, even if Microsoft has yet to officially pull the plug on the project. Even though Microsoft is still sending out updated versions of the Windows 10 Creators Edition, this won't change the fate of Windows Mobile.
Of course this doesn't mean that Windows won't ever build another smartphone again. The solution on the distant horizon is called "Surface Phone" and fans the flames of the Lumia enthusiasts. The thought behind the Surface Phone is that it's a smartphone without a mobile OS. It would run the "normal" Windows 10 operating system with its own custom user interface. A core point would be that the smartphone could run all x86 applications, ie the normal Windows programs. Maybe this would the first step for smartphones to officially replace PCs in the future.
"In the future" is exactly the problem though. The Surface Phone has long been proverbial carrot, dangling on a stick in front of the tech community. The market however does not stand still. Samsung recently launched a solution with its DeX-Dock and despite all its weaknesses (price being the biggest issue), it still has the potential to set a quasi-standard.
The biggest question remains though: how big is the desire or need to connect your smartphone to a monitor, keyboard and mouse? At the moment this concept only satisfies an extremely niche market and this will turn out to be a huge problem for Microsoft. If you want to be successful in the mobile segment, you need a large base of "average" users, not a small niche of "specialists". I'm not sure how Microsoft wants to, or even could, tap into that potential market in the near future.