My contacts suggest that Microsoft's next mobile device will be running something internally referred to as
Andromeda OS; a version of Windows that aims to be modular enough to run on any form factor, and as a result removes the need for a separate "Windows 10 Mobile" SKU.
Because of this, Microsoft no longer needs a phone-specific version of Windows 10, which means Windows 10 Mobile is now redundant. This is great news, except for one crucial detail; existing Windows phones won't be getting an upgrade to this "Andromeda OS."
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According to my sources, the feature2 branch exists to continue supporting what internal Microsoft documentation refers to as "legacy ARM chipsets" over the next year and a half. The feature2 branch's main goal is to continue servicing Windows 10 Mobile devices through 2018 with bug fixes, security updates, and new Enterprise specific features. I'm also told Microsoft will be backporting new UWP APIs that are introduced in Redstone 3 and Redstone 4 on PC.
The reason these APIs are being "backported" and not natively introduced is because the feature2 branch is technically Redstone 2 under the hood. When Microsoft branched off Windows 10 Mobile into the feature2 branch, it also froze OneCore development at Redstone 2. Now, considering Windows 10 Mobile won't be rejoining the rest of Windows 10 development, this means Windows 10 Mobile will be keeping with Redstone 2 for the remainder of its life.
So, to compensate for this, Microsoft will backport new UWP APIs that get introduced in Redstone 3 and Redstone 4. This means that if an app developer is targeting any new UWP APIs that get introduced in the next couple of Windows 10 releases, those apps will continue to work on feature2 Windows 10 Mobile. This should give Windows 10 Mobile an extra push of life through the next year or so.
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It is true that for a while, Microsoft did continue compiling Redstone 3 builds of Windows 10 Mobile internally, but only to continue developing
CShell on smaller, current engineering devices. However, I'm told that as of last month, that is no longer the case, as CShell is not coming to existing Windows phones. It's also worth noting that Microsoft's effort of backporting new APIs to Windows 10 Mobile is only planned up to Redstone 4, but that could change down the line.
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So in short, Microsoft is keeping Windows 10 Mobile around for the foreseeable future to cater to its remaining users. The company is hoping to have its next attempt at Windows 10 on a mobile device ready before it drops support for Windows 10 Mobile entirely, which we're expecting will happen by the end of 2018.