MS simply doesn't get it...
The main problem, as I see it of course, is that times have changed. Dramatically. Back in the "old days" we had to cough up quite a few bucks before we could actually do some Windows based programming. And before everyone now starts to go "Yeah, MS sucked": this wasn't an sole MS endeavour. If I wanted to program stuff for Solaris (back in the good ole Sun days) I also had to cough up quite a few bucks to get my hands on a native compiler.
And then Linux and GNU happened. It has caused major changes in the way people approached the "old stuff". Buy a Solaris compiler? Why bother; some cool dudes have ported GCC over to Solaris, I'll just use that. Buy myself a Windows server to get some cool Windows based network going at home (yes guys; some people actually like Windows / Windows based computing)? Sounds cool enough; if only prices didn't start ticking at $ 700,- and up. I'll just get myself a Linux box and put Samba on it!
The way I see it Microsoft really has no clue - what so ever - how to deal with this. Sure; they came to their senses where servers are concerned and introduced low priced "home servers". That was a smart move. They also (as can be seen in the article) started providing free developers environments. It doesn't support everything, but you can do some serious stuff with it (I use the C#.NET Express version to program PowerShell extensions and that works quite well).
But the thing is; I don't think they did that because of market strategy. I think they did all that purely for "damage control". You know: If a $700,- sells only 2 times you could put a cheaper version on the market. Because if a $300,- solution manages to sell 5 times you're already close to achieving more than you did before.
WP8 (and WP7) development? Sure; the development tools are free. But the rest is not; its actually quite expensive. And yes: I know they have an introduction offer right now: "$8,- for 8". Thing is: you don't simply pay $8,- and be done with it. You pay them $99,- and can then hope to actually get your $91,- refund. Also very nice for people outside the US who will get even less discount due to currency changes.
Lets see.... WP7.5 / WP8: small marketshare, free development tools but you have to pay before you can do some serious development (even when using your own phone), and you're restricted to using Windows 8 (as of WP8).
Android... Free development tools, you can easily unlock your phone yourself so that you can get hands on experience without paying a dime extra, its the market leader right now AND you can basically do your development in any environment you'd like; from Windows to Linux.
Gee; I wonder why Windows Phone doesn't manage to attract the real geeks....