It's worse than that. Short-term they will be better off if they'll stop producing Windows Phone, sure. But long-term they'll lose the ability to dictate rules to the industry - and the Microsoft's business model today is built around such control. Of course it may already be too late as this [relatively old] article describes. That is why Microsoft is so desperate. Steve Ballmer even said so himself: if you actually take a look at the 1.3 billion phones that get sold, I’d prefer to have our software in 60% or 70% or 80% of them. Monopoly was desired and expected at the time.
The future lucked certain: market share of Windows Phone slowly but steadily grew and Microsoft was pretty sure that it'll have at least 50% of market soon ("60% or 70% or 80%" was the real hope) and then people will be forced to continue to use Microsoft's things "as they always did". But iPhone reversed this trend and Android (along with the idiotic idea to drop all compatibility from Windows Phone 7 and restart the whole franchise) blown up all plans. Now Microsoft is in position "we need to either force Windows Phone on people somehow or we need to reorganize the whole company - similar to what happened with IBM twenty years ago". And since total reorganization of Miccrosoft means, most likely, the end of the story for Steve Ballmer... as long as he's in charge Microsoft will throw good money after bad.
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