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As far as we know Microsoft has shelved their wearable ambitions, but the rumour is that prior to its cancellation Microsoft was working on a Microsoft Band 3, and as part of the effort attempted (and failed) to port Windows 10 IoT to the new device.
Some further indication that Microsoft was still very recently working on their wearables project is a new patent application for a “WEARABLE PERSONAL INFORMATION SYSTEM” applied for as recently as the 11th July 2016 by the Xbox Design Labs. The patent is a continuation of a Oct. 29, 2012 patent of the same name, and in the latest application Microsoft fleshes out the details somewhat more, in particular concentrating on how the sensor/processing module would be removable and how it would be retained in the housing.
Particulars noted include that the module would be inserted from the bottom of the frame and snap into a tongue and groove joint on the frame section.
Microsoft notes the sensor module would either have a concavity or gasket on the underside which would shield the optical sensor from outside light, allowing the sensor to read your pulse without interference.
The sensor module would then be removable by downward pressure until it “unsnaps” and could then be placed on a stand where it would attach magnetically, and would then be charged and synced as needed.
Microsoft holds a design patent for the exact shape of the device depicted above, suggesting they were actually going to release the device more or less as depicted.
Whether this is still the case seems doubtful, given the shuttering of the Microsoft Band team, but hopefully at some point Microsoft will once again feel pressure to be part of the fitness wearable world.
The patent can be seen here.