It's a tarnished brand. It doesn't really matter how good their product is: People have grown up using and loathing Microsoft software. The vast majority of people will run away from a Microsoft product if they aren't forced to use it. They could sell their phones for $0 and throw in some hookers and blow to seal the deal and people still wouldn't buy them.
If they just stopped chasing the mobile platform that they'll never get, they could actually entrench themselves into their core business again: Making bloated but ubiquitous operating systems and business software. As a Linux guy, I almost feel ashamed to say it but, I actually *liked* Windows 7. Firing up a copy of Windows 10, I feel like I need an XBox controller and a touch screen to use it correctly. The first time I used it, I literally could not figure out how to make the machine shutdown.