A surface phone would leverage the surface brand, retain compatibility from wp10 (and wp8/8.1 despite what some seem to believe), and be able to run a full Desktop OS via continuum, the killer feature that never killed.
Windows 10 S is a clear attempt to push UWP going forward. I think this is with a view to future arm devices. It really seems like winRT again from the other direction. Right now you can upgrade 10S to run full Desktop apps but on future devices (ARM) who knows?
There's also talk of x86 emulation on ARM now that Intel has given up on mobile.
So too with x86 on ARM emulation there's a bridge for that gap that "ARM Windows is not real Windows" now.
I expect Microsoft will continue to make plays in the space for Windows 10 on mobile/pocket PCs, especially when the timing is right (the right hardware combo, perhaps; or more of the mobile-intended "Redstone" features finish out, maybe).
But they have made all the right moves over the past five years, and have lots of momentum, cash, and goodwill from the tech community. They will do some sort of big mobile push in the near future. Probably some kind of Surface Phone, which can double as a desktop.