I do not believe Microsoft will cancel Andromeda. Andromeda, and all the Windows software that has to support the dual screen device, will be the most important thing Microsoft has done in a long time. The day has arrived where something that fits in your pocket is powerful enough to be a desktop computer. The Windows 10 on ARM devices running on a phone chip (Qualcomm 835) is proof of that. Andromeda will run on even a faster chip, so can serve as a desktop running through Continuum. The true revolutionary thing about Andromeda is that it will be a 3-in-1 (phone, tablet, and desktop). This is something that will take time, but eventually, we are all going to move to just having a single device. It just makes sense. The exception will be extremely powerful desktops used for supercomputing needs and high performance gaming. I work on software for oncologists to make radiosurgery plans carried out by robotic linacs. This software uses massively parallel computing on very expensive and LARGE graphics cards to compute the simulation of exposing tissue to radiation (e.g. dose calculations). This type of computing will never go pocketable because we will always need the Lamborghini of computers to carry out these calculations. Most computing work can be handled by a Honda Civic (to push this metaphor). And now a Honda Civic can fit in your pocket. This is a defining moment in computing history that a Honda Civic can fit in your pocket. Operating systems need to be ready for this. That is, they need to be ready for the 3-in-1 device. Andromeda is this play for this future of operating systems. A future were operating systems are form factor agnostic. When people start to see the simplicity of a 3-in-1 device, they will start to realize how dumb it is to pay for a flagship phone and laptop that run two different app eco systems.
Andromeda is also revolutionary because it has dual screens. I remember when I got my first dual monitor desktop setup. The productivity gain was amazing. Once you get use to two monitors, you can never go back to just one. It will also be that way in mobile. To be able to see two apps at the same time will be awesome, and once you get used to it, you will not want to go back.
But Andromeda is more than just having two screens. The OS is being fitted to allow a single application to utilize two monitors. This, in the history of computing, is something completely new and revolutionary. For all of time, windowing OS such as Mac, Linux, and Windows, allow a process to map to a single main window. Generally that single main window is used maximized to a single monitor. On multiple monitor setup, a single main window can be enlarged to span monitors, but generally that doesn't work to well. I've worked on Radiology reading web applications that could run on four super high resolution monitors. This was done by opening four browser process (one for each monitor). Some window z-order magic was needed to make these four process main windows act like they were one applications. That is why there are very few Windows applications that truly know how to utilize multiple monitors. Visual Studio is one that comes to mind. Other application utilize child windows tied to the main window that can be dragged to the other monitor, but by in large these child windows are temporary. The dual screen API coming in Windows 10 to support Andromeda will allow a single app to easily use two panels that can be situated on separate monitors. This will be liberating for app developers and super cool for users when an app can make a really nice two panel layout for optimal productivity without having to make the user drag windows around. Duel panel apps will be super cool. They will still work on a single screen, but once you are used to the dual panel layout, you won't want to go back.
Windows 10 is a great operating system, but it has a ton of legacy baggage dating back several decades. The time is now for Windows 10 to evolve for the future. It cannot stay the same due to the reality of computer miniaturization happening today. Core OS is the right move for this new future and Microsoft has to get versions of Core OS out there so they can iterate it. Andromeda needs to be that first iteration.
If Microsoft waits too long to release Andromeda, it will be really bad for them. When 3-in-1s are more and more common place, people will not solely choose a platform due to app availability. The operating system will play a role in the platform choice. If your single device was using Android, would you be happy when it stops getting updates in a year and half? Microsoft needs to position itself to be the operating system of choice for 3-in-1 devices. They cannot wait for this because Google is working on Fuchsia and it will probably also be a 3-in-1 operating system. Fuchsia will also run Android apps. Billions are already familiar with the Android app eco system. Fuchsia could do serious damage to Microsoft's dominance in desktop computing, especially in the future when desktop and mobile are one in the same. Microsoft cannot cancel Andromeda.