The Microsoft phone failed even though it was technically excellent. A shortage of good apps did it in. It would be great if Musk were to succeed at this but it would be a long shot. Very expensive and very risky.
I highly doubt the Microsoft phone was technically excellent. I say this as a Certified Microsoft developer who worked with Microsoft technology for 20 years. I suspect they tried to tie it to some sort of weird dot net developer community but I never had any direct contact with their phone stuff
I have left the Microsoft development sphere but your point about lack of apps is spot on. The only way I think they could make it work is if it is an Android fork so that at least the Android apps would work (possibly require a recompile)