that's because they half assed it.

There's always the risk that mobile phones supersedes the desktop, and thus cannibalize the desktop windows sales. Microsoft also likely not able to force OEM licensing in the same way that they could with windows on PC sellers.

If you could literally run windows apps on a phone back then, i reckon the MS phones would've at least grabbed some marketshare. Of course, the mobile hardware back then isn't as powerful, so there's the excuse that win32 cannot run there.