No matter how you slice it sales of Windows Phone have been underwhelming. On the other hand I think Mango went a long way towards closing gaps between WP and Android or iOS, which will help. There are two problems/questions:
1. What will change WP market share?
2. How can WP compete with the momentum particularly in apps, it's sort of the classic Microsoft vs. Apple story in reverse, Mac failed to take off because of a lack of software, in this case WP has a similar limitation and no real incentive for developers to cross develop for WP when it represents only 1% of the market
I'd say Win8 represents a huge opportunity for Microsoft, they either make it there or they don't. If they leverage Win 8 into an eco-system that drives support for WP8 then they could have some success but they are pretty behind in market share, eco-system, and brand recognition, they are going to have to be willing to spend some significant money to close the gap. Best thing for them is probably the tablet space, since Android hasn't managed to get much momentum (ironically, again in large part due to poor app support), Microsoft might be able to provide an attractive alternative to OEMs for their tablet environment, which in turn might be able to be leveraged onto phones. The big question again is software, what will they have to excite and empower users? I for one am really holding out for Office on that platform, if Office isn't available near release that will significantly dampen it for me.