Microsoft and other companies ultimately chickened out of taking risk with this. It happens a lot. I worked for Nokia around the time that the rumors about the iphone started swirling in 2006. Exact same thing. At that time, Nokia had multiple touch screen operating systems, a linux based internet tablet running a mozilla based browser with a webcam, Symbian phones running browsers based on khtml (which later evolved into webkit, safari and chrome), lots of nice hardware, lots of investment in hardware, chips, radio technology, etc. A lot of mobile firsts happened long before there were iphones, android phones, ipads, etc. Nokia had a huge technical moat.
Six years later Nokia pulled the plug on the whole thing because it got absolutely steam rolled by Apple who had none of those things but started building them around the same time Nokia decided to focus o flip phones instead (sorry, this level of corporate insanity still makes me angry). They were worried about the Motorola Razr more than they were about the iphone. They actually killed multiple touch screen platforms because of that before scrambling to re-build one around the sinking ship that was Symbian. And then they badly botched that. Reason: Nokia management was arrogant, out of touch, clueless, incompetent, complacent and utterly in denial about there even being a problem. Six years later the whole lot got fired and sold off to ... Microsoft. Who of course promptly killed it because Apple had won already and between them and Google, MS saw no path to success. So, they walked away from the whole thing.
That's the company we're talking about here. So, sure, MS has stuff that they've been sitting on for ages. But what they've lacked for years is any clue as to what to do with all that stuff. Like with the iphone, Apple has been known to prepare something for years. And people just assumed it would be fine and disappointing.
IMHO things are not that hopeless for MS and they could pull a few things together. XBox, holo lens, and some other bits and pieces could make for a half decent experience. Apparently they are talking to magic leap about licensing some of their tech as well. But that's not going to happen overnight and a rush job is not going to be good enough here.