There's been plenty of speculation, but Steve Ballmer just dropped the quasi-bombshell at a shareholder meeting: "We've got broad initiatives driving Windows down to the phone with Windows 8." The choice of words is incredibly (if unintentionally) telling, but also a little vague. Like with tablets, Microsoft would rather cram a desktop OS "down" into mobile form, than build off of a simple mobile platform into something more complex. Of course, that's the least favorable interpretation, and Ballmer obviously didn't expound on these future plans, since there are plenty of Windows Phone 7.5 phones to be sold.
Since Windows 8 is already heavily indebted to Windows Phone, at least when it comes to looks and UI concepts, it's unclear if this is a true merging and unification of platforms, or just an extension and refinement of existing synergies — the latter sounds more likely, but with the Windows 8 core up and running on ARM, anything is posible. Meanwhile, Joe Belfiore, VP of Windows Phone, still sees a clear distinction between the operating system(s), so maybe Ballmer's really just talking about simple synergies: "Our point of view is, below, let's say 7 inches, and make voice calls, that's a Windows Phone. Above 7 inches, not making voice calls, that's a Windows device." Maybe 2012 will shed more light on this situation.
Update: Microsoft has clarified to Business Insider that Ballmer didn't say Windows 8 is coming to phones (contrary to some reports), and offered its own official transcript of the quote:
"We've got broad Windows initiatives driving Windows down to the phone. With Windows 8, you'll see incredible new form factors powered by Windows from tablets, small, large, pens, smaller, bigger, room-sized displays."
If you're down for a longer read on the matter, we covered Microsoft's march toward a single platform back in July.