In recent weeks, two somewhat fishy things have happened.

First, Microsoft sold the remnants of its feature phone business to Foxconn and some small player in Finland not called Nokia, and announced plans to "streamline" its smartphone hardware business. Second, the smartphone side of Redmond's business—Windows 10 phone—slipped to under 1 percent market share, making it a complete afterthought for smartphone shoppers.

As a result, everyone is suggesting that Microsoft is going to give up on the smartphone game completely, despite the fact that the smartphone is the single most popular computing device in the world. What is wrong with this picture?

While Microsoft invented the smartphone with early offerings from Ericsson, Sony, and others, it did not invent the Apple's smartphone paradigm. It came so late to the modern smartphone game that nobody cared. Worse, the Microsoft original sin of portraying the phone as uninteresting is something from which the company has never recovered.

If you are not familiar with the early marketing of the Windows Phone, the basic thesis stemmed from the Season of the Witch idea shown in this ad:

The idea was that smartphones were horrible time sinks and distractions from good old day-to-day business. (Indeed they were and still are). So the ads promoted the idea that Windows Phone was not bad like these other things, which people are constantly looking at and checking, as if addicted.

The subconscious message, from which Microsoft could never recover, was that popular smartphones were incredibly compelling and that Windows Phones were not. There was no reason to even use the Windows phone, apparently.

Ironically, these ads were thoughtful, funny, and slick. They just sent the wrong message.

All of this adds up to today's dilemma: Windows 10 was derived from the Windows Phone GUI, and is meant to point to the phone, because that is what people use most to access the Internet. So Microsoft cannot abandon smartphones. It's crazy to imagine it.

But what can Microsoft do to reverse this fall into the abyss? It can't continue stubborn efforts to compete with Apple and Google; it has to be more subversive. Redmond could get a lot of traction releasing the OS into the wild with a few installation kits that would allow me to download and install Windows Phone on my Samsung Galaxy. It would be one of those cool hobbyist tricks you could show off, toggling between two OSes.

If that's not doable, Microsoft has deals that mimic the Android gambit: licensing it to all comers for nothing. Compel the small fry to install Windows on those sub-$100 smartphones that are taking over developing markets. That's buying market share the old-fashioned way and something Microsoft knows how to do. The fact that Microsoft has not been pushing this aggressively makes me think it has something else planned, but what?

If Microsoft wants to stay its current course—which is not working—it should pull a rabbit out of a hat and develop one true killer app that only runs on a Windows Phone. But nobody in their right mind is going to develop a killer app just for Windows Phone. The market is too small. So Microsoft has to invent something in-house, or buy a fledgling developer and pay them handsomely.

There is zero evidence the company can accomplish this. Some new idea has to evolve. But that new idea cannot include giving up on the platform and throwing in the towel.

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