As far as I can see, the only real hope for Microsoft in the smartphone market is to buy RIM (Blackberry).

There is no pure software market in selling mobile operating systems. Just as there wasn't in selling operating systems for web-servers.

As with web-servers, the only os likely to gain traction is one which is effectively free like Android.

Or you make your own handsets.

Buying Blackberry would give M$ a handset manufacturer, a valuable enterprise brand, and the headache of merging its engineers and software with RIM's. Nevertheless, I suspect that the latter is a price worth paying for the first two.

Ideally, forget the "Windows Phone" brand and concentrate on using M$ muscle to promote the Blackberry with enterprises, carriers, retailers etc. Then merge specific interesting new M$ technologies, apps, UI innovations, engineering teams into Blackberry.

Won't happen, of course, as long as the "cult of Windows" remains dominant at M$.