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.
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.