This was almost certain to happen. It would have been extremely uncharacteristic of Microsoft to continue this product line.
Unfortunately, this also closes off an avenue to Nadella to prod Windows Phone to become truly competitive as a mobile platform, and for Microsoft's ecosystem to have an in-house target for platforms other than Windows Phone.
Microsoft is definitely targeting Android - its just that they don't think they need to 1) fork or 2) provide hardware that runs Android to be successful.
Of course that's what they are thinking. But that line of thinking is brittle in a couple of ways: With no constituency for applications on an Android runtime inside of Microsoft, there will be a tendency to find "synergy" and make products for Windows Phone first. Windows Phone has a small enough share that it could fall off the bottom of the mobile market share ladder. Even without a complete market failure, the natural tendency to serve an internal constituency first and best will limit the reach of Microsoft's ecosystem.
There is a good case to be made that Amazon is a better competitor against Google's media products because Amazon's native platform is based on AOSP and development uses the Android toolchain.
Unfortunately, this also closes off an avenue to Nadella to prod Windows Phone to become truly competitive as a mobile platform, and for Microsoft's ecosystem to have an in-house target for platforms other than Windows Phone.