The “people” app (on the Windows phone and tablet OS’s) doesn’t sync contact subfolders with MS Exchange or MS Online Services.
I discovered this while playing with my new Dell Venue 8 Pro tablet. It comes with Windows 8. Overall I like the tablet, and because it has the full Win 8 OS, I can install any software, including MS Office. So I have a workaround for accessing all my Exchange contacts. However, if this were a phone without the option of installing desktop software, I’d be exchanging it for an iPhone right now.
iPhone/iPad and Android both have this feature. It’s ironic that Apple and Google have superior Exchange integration to Microsoft.
