"Great at hardware, rubbish at software" was a very common refrain even at the time, and that was a manifestation of the same internal dysfunction. What wasn't clear was whether anyone could come along and fill the gap, or when they might.
Because so much is software-based now, my counter would be that most companies that would have died because they failed to get their software operation in order have already done so.
According to that theory, we should have expected Windows Phone to be a success, no? Microsoft was (and is) killing it at software, especially consumer-facing OS. If anything, your argument makes me even less convinced that we have any good explanation for Nokia's failure.
MS was also internally dysfunctional, but focused on the business market for phones, and at the time of the iPhone was being roundly laughed at for the Zune. It was just different market segmentation. I'm not saying that all you need for success is competent software delivery, but lacking it in this sort of arena was definitely harmful.
And I'd also question the "killing it at software" statement: remember that Windows Mobile (not Windows Phone, you've got to go to the product iteration before to make the dates line up) was catastrophically hamstrung by an inability to ship anything decent. I had a Windows Mobile 5 device myself, and it was rubbish. They were so focused on making it so you could run a spreadsheet on your phone that they forgot the thing had to be usable. The OS wasn't actually much good until post 6.5, well after the iPhone launch, and they never got to release the iteration that would have brought it up to scratch. They realised very late that they needed to focus on consumers, not businesses, because they could see that businesses would and did buy consumer devices if they were good enough, but the reverse would almost never happen. Once the iPhone was released and they realised how wrong they'd been they made a hard pivot to get Metro out, but they were starting from a very long way behind.
More evidence against "killing it at software": this was the Windows Longhorn/Vista era. We all know how that went. Microsoft managed to survive for a long time on desktop and office suite monopoly momentum without being able to stick the landing on very many releases at all, compared to how much activity was going on. Even though the launches would go OK they'd often get killed later by internal politics. That was actually the era that got me to swear off the Windows ecosystem: you'd learn enough of an exciting new product to be useful, only for it to get sidelined with no updates a couple of months later. It was just exhausting. Half of me thinks that MS was lucky to survive Ballmer at all.
I actually share the sentiment about Ballmer, but then the actually shared characteristic is poor management, no? MS just happened to have enough legs to limp out of a bad management episode on.
Microsoft is successful when they are early at something. Coming many years after iOS and Android.
Microsoft now is successful because of cloud and working with cooperations. Not because they made the best OS. Their Microsoft Mobile wasn't very impressive. And their second attempt was ok, but very late.
The were gifted a monopoly by IBM so they constant fuckups that cost them many millions or billions of $ couldn't kill them off like it could other companies.
Taking full advantage of a monopoly isn't the same as being actually good. The beat their office competitors by leveraging their OS monopoly with very cheap bundling deals. They spun the OS monopoly into a 3D interface near-monopoly that made games only work on their platform. The list goes on.
Microsoft was still struggling with the fallout from Vista. Microsoft scrambling for that Vista SP1 and you would think they have time for Windows Mobile. Not to mention they were missing earnings and revenues going into 2008.
>Microsoft was (and is) killing it at software, especially consumer-facing OS.
What? Blue screens of death. Malware. ctrl shift del being known by lay people. People being able to use the excuse that their Windows computer is randomly updating as a reason they cannot do the work they want to do. Not being able to create/edit/sign pdfs without downloading sketchy 3rd party programs.
Amount of time spent being tech support for family members when they were all using Windows computers was magnitudes more than the amount of time spent being tech support for family members after they switched to MacBook Airs (10+ years ago).
I am not saying Microsoft is bad at software, but certainly would not claim they kill it at consumer facing OS.
Because so much is software-based now, my counter would be that most companies that would have died because they failed to get their software operation in order have already done so.