The current approach seems to be; 1. Set themselves up as a big player in a smaller market. 2. Wait for the smaller market to grow.
In other words, they're trying to play the long game.
As for the comments about Android, the article is link-bait, pure and simple. Being open to an idea doesn't mean you have any plans to implement it. To use an analogous story, imagine we were colleagues and you mentioned in a conversation that you may work for a different company before you retire, if I was playing TechCrunch's role I'd be going to your boss and saying you were planning to get a new job.
HTC have, for a variety of reasons lost a lot of ground to Samsung.
The question I always find myself asking, is would Nokia have faired better there?
On WP they only have to out gun HTC really, thats it. On Android, Samsung are doing a good job carving out the high end, the mid range, and leaving the low to no profit margin to the Chinese and nock off brigade.
Will Nokia's Microsoft gamble pay off? Who knows, Would it have been raking in the billions if it had gone Android? Probably not, as HTC's problems show.
As others have stated, there's nothing wrong with Nokia building out Windows Phone phones. The issue is exclusivity, which is understandable given the $1 billion a year Microsoft is paying them. I suppose we will see which way Nokia turns once that contract ends (whenever it does end).
WPs market share is dismal, and brands like RIM (and Symbian!) have been losing market share, so it is certainly possible Microsoft can increase in market share. But I think every day that goes by, the chance of it becoming a dominant mobile player recedes. Apple took its place in the market years ago, and Android is now in an advanced state on many fronts - market share, ecosystem etc. Android is in a much more solid place then it was even a year ago, a hold which would be very difficult to dislodge.
One might guess that some of these payments are conditional on Nokia not offering another smartphone platform. If so, that's what Nokia has to lose. Then again, if those payments are also somehow keyed to the size of the Windows Mobile market as a whole (e.g., those map royalties), they might not have nearly as much to lose as both sides anticipated when they made the deal in the first place.
[1] http://www.tomshardware.com/news/Microsoft-Nokia-Windows-Pho...
[2] http://conversations.nokia.com/2012/10/31/frequently-asked-q...
What Microsoft should really do is play Apple's game instead of Google's. Buy Nokia and make their own phones with exclusive access to WP8.
It's Google that plays Microsoft's game, which has been played before and Apple lost.
It's inevitable for Apple to get caught by competition, they are also bad at competing on price and their distribution network pales in comparison to the distribution network of all Android phone makers combined. One or two years ago, people talked about how small the Android apps ecosystem was compared to iOS, but nowadays they are almost on equal footing and eventually Android's ecosystem will get much bigger.
If there's anything Microsoft learned is that hardware becomes eventually a commodity and their Windows/Office monopoly made it possible for them to release one shitty product after another and still have room for recovery.
Apple may be more profitable than Microsoft, but they don't have the same wiggle room for screwups.
Hardware becomes a commodity if you let it become a commodity. That's what happened with PC's and that's why all the sane manufacturers gave up their PC hardware businesses. But Apple is still making plenty of money selling non-commodity personal computers. Apple's margins on "commodity" hardware like Macbook Airs is 25%+.
Moreover, even if hardware becoming a commodity is the equilibrium result, it's not sensible to go from there to conclude there is no money in hardware. In the long run, in competitive markets, profits tend towards zero anyway. The trick is to make money during shifts from one equilibrium to another. The iPod cash cow seems to be dropping off for Apple now, but in the intervening decade they made boatloads of money on that product.