The "app gap" is overblown. If people actually looked at what apps they really actually use on a daily basis, they'll probably find they're all there on Windows. I certainly did.
There are one or two that pop up occasionally where a new app is out and of course, no Windows. But then I look at it more seriously and wonder if I'd actually be using that beyond the initial novelty factor. Likely not.
I've always been a Nokia fan, and had a couple of departures, one before the smartphone craze to a Sony, and another to Android via Samsung. Both times I've returned. Okay now the Nokia is in the guise of Windows and being a 640 it's lost the Nokia branding, but there's still lots of Nokia in there, and the hardware once again is way better than I've experienced with Samsung. People just look at specs and criticise Win phones due to lower published specs, but then Android phones need high specs to run resource hungry Android. Nokia chose well in a way with Win Phone as it fitted their legacy of efficient mobile operating systems.
Windows Phone will never take on the world. It may remain a niche product. However Microsoft have shifted focus to just Windows and Windows apps and services, on any device. Some of those devices may be phones and may run Windows. Or they may not.
If Windows running on phones is a dead end, I'd be okay with Windows apps and services running on Android. Would like to see a Windows-centric Android with no Google fluff. Windows Store, able to run any Android apps.
Better still is Microsoft to fork Android and make it way more efficient. Though why bother when Windows is way more efficient anyway. Other option then is running Android apps on Windows, but I can't see that being able to make Windows Phones more attractive.
Last gasp is Windows 10. It's not looking good, but maybe it can cling to life and we still have a niche market. I'd like to stick with Windows if I can.
Oh and p.s. it's been commented elsewhere that the report is focused on a period naturally low in sales anyway, and sales are down across the board, plus it's prior to the recent launches of flagship models and then who knows what a Surface phone will bring. Still, it could be right.