With the current product norm and business model, a new smartphone competitor would be a loss maker. There must be new technology and / or innovation to create disruption. I am happy with my 950XL. The battery is still in good shape. The screen is comparable
to new phones. Dual SIM. Memory expansion. If Microsoft made a foldable version, I would definitely buy it. But it would essentially be the same thing as a phone and selling phones isn't enough for profitability. Apps and subscriptions must be sold through
the device. I am using a paid navigation app, Office 365 and there is the Netflix app which I subscribe not to watch on the phone unless I am desperately bored. That's all Microsoft makes from me through the phone. Yet they still support the device and update
it. All native apps are clockwork. That is loyalty to the customer.
Android makes a living as an advertisement agency. iPhone is an accessory first with a price tag in line and it has a millennial base that spends money on trivial apps.
If they make a Surface phone, I'll buy it. I don't think they are supposed to as a business, but they spent money on things before. After all, there would be patents other phone makers might have to pay, etc.
My more realistic expectation is toward the HoloLens. Not now, but perhaps few years later. When it becomes smaller and lighter, it will be a fantastic companion to a phone in the pocket. There are endless possibilities in such product bundle.