Do not forget that if MS turns the Series S mobile, it already have developers support because its just a modified Series S. The majority of Series S games do not go above 1080P and most displays today you can get that on the cheap so it would be no changes needed for Series S mobile device for support.
As to the issue of MS creating a windows mobile device, MS already have Surface laptops and Tablets. Let OEMs make those portable mobile devices like ASUS AOG using windows and MS create a more mobile version of the Windows OS to help with performance, Navigation, memory management and battery management.
MS also is a pretty damn good hardware company based on their Surface line and they have the money to make a mobile handheld device at a reasonable price so they could also do what they do with the surface line and set the standard for such devices and license out the mobile windows version of their OS to OEMs as well. Both approaches are viable and there is a market for it.
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