It's not clear yet what the hardware requirements for this might be - for example, running a legacy app with legacy desktop controls makes no sense on a 5" phone screen - but this all certainly opens the way for new 'super mobile' devices - and that's just scratching the 'surface' (pun intended).
From the Microsoft announcement:
Finally, we talked about innovation that empowers creation in a connected, mobile world. Everyone is more mobile today than ever before in large part due to pervasive, faster, and more affordable cellular networks.
In future Windows 10 updates, we will enable connectivity that is always within reach. We will help customers easily buy data directly from the Windows Store and put them in control of how they use Wi-Fi and cellular networks, consume data, and manage costs. We will enable our partners to build always-connected devices without hindering form factor design. Specifically, partners can take advantage of eSIM technology to build devices without an exposed SIM slot, making it easier for people to activate a data plan right on their device.
Finally, to deliver on our customers’ growing needs to create on the go, we announced today that Windows 10 is coming to ARM through our partnership with Qualcomm. For the first time ever, our customers will be able to experience the Windows they know with all the apps, peripherals, and enterprise capabilities they require, on a truly mobile, power efficient, always-connected cellular PC.
Hardware partners will be able to build a range of new Qualcomm Snapdragon-powered Windows 10 PCs that run x86 Win32 and universal Windows apps, including Adobe Photoshop, Microsoft Office and popular Windows games.
With Windows 10 on cellular PCs, we will help everyone make the most of the air around them. We look forward to seeing these new devices with integrated cellular connectivity and the great experiences people love like touch, pen and Windows Hello, in market as early as next year.
The software and hardware innovations we have seen today position us all to continue to push the boundaries of what’s possible. Together, we can fulfill our mission to build technology that serves all of us, by ensuring there are devices for the creator in each of us.
I'm not sure that 'cellular PCs' is a snappy or sexy enough term, but we do get the idea. Yet again it seems the sweet spot for Microsoft on mobile in the future will be between traditional 5" consumer phones and traditional laptops. Starting with a 'Surface phone' as a technology demonstrator and going up to hybrid devices.
This is all (at least) a year or so out, being very much tied into Windows 10 'Redstone 3' (and beyond) and dedicated hardware designs (including new Qualcomm chipsets, starting with the already announced Snapdragon 835) that we've yet to see. It's interesting - though I'm still keen to know and make sure how much of all this DNA makes it into the builds of Windows 10 for the phones we already have and (largely) love.
By the way, if you're new to all this and are confused about ARM versus Intel x86, here's a quote from WC's coverage, where Daniel Rubino explains it rather well:
ARM is the architecture used in modern smartphones. Whether it's Apple's A10 Fusion chip or Qualcomm's Snapdragon line, these processors are all based on the ARM architecture. ARM differs significantly from x86 and x64, which is what Intel chips like ATOM, Core M, and Core i are based, as well as AMD's processors. Windows 10 Mobile runs on ARM; Windows 10 for PC runs on x86-64. Both share OneCore and UWP as their center of overlap. The difference is also why you cannot run x86 Win32 apps on your phone. Architecture matters.
Because ARM was made to be efficient for small batteries and reduced thermal loads, it's ideal for smartphones and slim tablets. Historically, ARM chips were significantly less powerful than desktop-class x86 processors. That's been changing in the last few years. Apple's A10 Fusion chip, found in the iPhone 7, is often compared in performance to the 2013 MacBook Air — which sported a 1.3GHz dual-core Intel Core i5 processor.
So, if ARM's so fantastic, why not just put your desktop OS on it? The task requires a tremendous amount of engineering and work. Microsoft, evidently, has finished it...
To use an analogy, imagine you'd just finished writing a textbook on, say, physics. And then the publishers come to you and say that they love the content but they also need it in French. And not just rough and ready French, but perfectly translated. So even though the content is identical, every single syllable of the book would have to be rewritten. And checked. That's the sort of rework that has had to go on under the surface (again, that pun!) of Windows 10 here.
We live in interesting - and ever more mobile - times!
PS. The full event keynote can be seen below, if you have a spare hour!