If people really felt that way why are they buying Windows phone?Competition is a good thing for consumers, and I don't think that an iOS + Android monopoly is a good thing.
Microsoft are not giving up on the Windows Phone software. However, the upcoming introduction of Universal Apps with Windows 10 is probably the last throw of the dice, to see whether this will drive more adoption of Windows tablets and phones.
If this strategy doesn't work, then I guess Windows will then only ever be seen as a desktop and server OS.