Personally, i think it was BYOD that killed off BlackBerry, and caused this market saturation with Android and iOS. When employees were given the choice of a business device, they merged the two and got either iOS or Android. For Microsoft, the real sweet spot for them is business users, since they can natively provide more integration with Microsoft business tools like CRM and Office, and hardware like Surface. The problem is that BYOD is going to make it very hard to win employees over when it comes to having them adopt a Windows Phone, and getting companies to cover the costs of a new device will also be a tough sell. The high costs of a device alone means folks are hanging onto their current device longer, and only replacing when it ceases to work or becomes too outdated.
There's also the question about applications. The majority of application creation is skewed towards Android and iOS merely based on market demographics. Getting them to code for a third platform will be not only costly, but less than desireable unless there are conversion tools available.
For me, the very cool redeeming factor of the Windows Phone is that you could do some great things with the XBox in terms of integration or second screen experiences. This could sway the XBox market potentially, but only if they deem the rest of the applications and phone specifications to be compelling enough...which sadly since the design is limited to one manufacturer, it will be tricky.
Microsoft has a strong legacy, it's just a matter of if the market pulls back into a multi-platform market, or simply continues with two main platforms.