I've got one in my pocket right now: Asus Zenfone 2. It just runs regular Android. Even has an "Intel Inside" logo on the back.

Windows has never had great dynamic scaling, so trying to run regular apps on a phone would be a nightmare of tiny click targets. Metro apps would scale better, but that was the whole point of UWP.

IMO they've given up slightly too early. They could have written an Android-on-Windows compatibility layer, or various other things, but Microsoft just can't handle a market where they aren't dominant. The only way they could leverage their dominance would be to break Exchange ActiveSync and say "if you want your calendar on your phone, it has to be a Windows phone".

And Intel have pulled back from the low-power area (mobiles, Edison) because they're not competitive there. Maybe the same "can't function when not market leader" problem.