My best guess is that this is a very real upcoming device. The odds of Microvision inclusion in this product are very high
There has also been mention of Microsoft Continuum -- as a phone feature, that "turns your phone into a big screen projector." [ Continuum here ] I don't think their use of language is accidental.
What happens remains to be seen, but Microsoft has worked with Microvision in the past, and Microvision is working with Microsoft devices. Microsoft is talking about a technology that turns a phone into a "big screen projector." Microsoft is going to release a powerful phone that will be like their surface tablet....
... and trial production started last November.
AutoworldNews (more at source)
The Microsoft Surface Phone is also perceived to be the miniature version of Surface tablets. If that's the case, experts consider the Surface Phone as the ultimate mobile device. It may even overtake Surface tablets for being able to make actual phone calls. It is a primarily a mobile device after all, but only on steroids.
As added by Trusted Reviews, the Microsoft Surface Phone may also run on Windows 10 since it is the last version of Windows according to Microsoft. This means Windows 10 Mobile will not be disappearing anytime soon. It is also reported that Continuum, the cross-platform productivity feature will play a bigger role on mobile.
This is a cooperation between Microsoft and Microvision from 2011.
Which also gives a lot of use cases (Microsoft OmniTouch @ Extremetech)
Surface phone Summary from Trusted Reviews