I've been running hot and cold on Win10M for a while now. That's not really fair. I really like Windows "phone". Been using it from a Lumia 710 running WP7.5 to a Lumia 640 running production Win10M. Like some of the posters, I have both this Windows phone and an Android (Honor 5X). I had suffered through early builds of Win10M and then switched to Android last year. But I kept the 640 around and used it as a mini Tablet. A few months ago, I swapped my SIM back into my 640 and used it as a daily driver until just around the time that the "Microsoft Edition" S8 news started coming out.
That news wasn't what made me switch my SIM back to my Android phone. It was an "app gap" thing. Not any sort of major app but a completely local app. In my city we have a local burger joint that's way awesome. They're operate out of an old ice cream stand sort of building and close up over winter and reopen in spring. They have an app which among other things implements their loyalty program; of course their app is Android and iOS only. Well, they reopened not long ago and it was time to switch.....
So the app issue, for me is the biggest thing in one sense. I know some people still are having issues with Win10M, but on production with my 640, the basic phone functions I need day to day (calling, messaging, browser, other basic apps) work fine. But in a deeper issue, the problem is that Windows on phones isn't nearly popular enough to be considered for all the varied sorts of apps that someone might want or need.
When it comes to desktops, Windows is the default. Chances are, if you need a commercial desktop class program, it's on Windows. It may also be on the Mac, and there may be programs on the Mac that aren't on Windows, but those two platforms are the biggest. Then you have the various
#3 players over the years - Linux (GPL/Linux?) being top of that list, but never a serious player on the desktop though it has had success in other markets. (And the Linux kernel shows up in Android and various devices like Roku, Tivo, etc.)
So you get to mobile, and Windows Phone. Sure, Microsoft had PocketPC PDAs and Windows Mobile 6.x and earlier phones, but if you take the modern touchscrenn smartphone era starting with the iPhone, the iPhone came out in June of 2007. Android launched commercially in Sept. 2008. WebOS launched in June 2009 and was acquired by HP in April 2010. Windows Phone 7 didn't launch until Nov. 2010. Think about his timeline. Microsoft didn't get it's touch centric mobile OS out for over 3 years after the iPhone, 2 years after Android, and over a year after WebOS launched and 6+ months after HP bought it. In mobile years, it was an eternity too late, and if it wasn't for being backed by Microsoft's war chest, would have been DOA.
When you're that late, you need to be working harder, smarter, better, faster than everyone else to have even the slimmest chance to catch up and move ahead. And you've got to be prepared to "bleed". Or walk away. To be fair to Ballmer, he did "bleed" - threw money at the situation and got Nokia to commit (via Elop). But lets face it, he was also the captain of the ship and the buck stops with him as to why they were in such a dire situation in the first place. Then after Nokia HQ leveraged the situation and got Ballmer to buy the handset group, Nadella took over as CEO and apparently thought that even though Microsoft (via the Nokia acquisition) had nearly 100% of the Windows phone market, they could quickly walk away and let 3rd parties fill it in. And what do you know, that didn't work.
Circling back to the S8 situation. What if Microsoft (understandably) wanted to get out of the hardware business, but recognizing that they needed to transition back to an arguably healthier (or at least more compatible with their desired business model) 3rd party hardware situation did something like the Google Nexus platform approach. Contract out with companies like Alcatel and HP to do handsets that Microsoft could sell under their Lumia brand. "Microsoft Lumia by Alcatel", "Microsoft Lumia by HP", etc. Help defray some of the cost/risk for these companies, while helping position them for eventually taking over the markets.