The reasons why Redmond is failing at gaining (mass) consumer attraction within the smartphone space are both numerous and simple.
Nevertheless; the underlying reason is essentially two-fold: one) trying to cram the desktop onto a handset (for how many years now) is obvious; two) application developers (overwhelmingly) have focused their efforts on Apple and (most recently) Google.
This is not to say that there’s no chance for Microsoft to generate some modicum of success within this market (there is). It’s more to say that as the early loss-leader within this market segment they really didn’t anything more than that (lose). And, just losing is certainly no formula for turning X into a success (that requires vision; timing; panache; luck and, most certainly, a superior product being offered).
From eWeek: http://goo.gl/YW4Zb