While it does make a little sense if you pay attention, I guess, Microsoft's business in the mobile space has been… sporadic. Initiatives seem to come and go with little notice, and they may or may not oppose one another. To me, they do seem to point to Microsoft wanting to keep Windows Mobile relevant as a third-place contender, but they realize that, outside of leaning it against the development of Windows 10 for PCs, it's a money pit. Its problems cannot be solved by simply throwing money at it, so don't throw any more than is necessary.
Through this lens, the recent announcement of the Alcatel IDOL 4S makes a bit of sense. Google has not secured their place in mobile VR, and Apple isn't even trying to enter this segment (as best as we can tell). Microsoft is also into VR and AR on the PC and console side of things, so I'm guessing that even that cost can be dulled slightly. As such, why not release a phone that has roughly the same specs as a ZTE Axon 7, which is itself positioned as a first wave of mobile Google Daydream VR devices, and hopefully plant your foot somewhere in this space? They even have an OEM partner covering the hardware side of things.
So, basically, it seems like last year, when we heard that Windows 10 Mobile would be quiet, it wasn't so much an admission of defeat. They really seem to be moving forward, slow and steady.