Anyone with half a brain knows that that is not the reason. Microsoft came way too late to market with a 1.0 version product while everyone else was 3 or 4 revisions deep.
edit: a few more thoughts
The mobile phone industry had become an echo chamber, then Apple came in and made a clean break, dropped the cruft everyone else was clinging to and pushed the envelope. Apple changed the mode and completely shook up the market, Google was the quickest in responding while Microsoft was clearly caught completely off guard and is finally putting its best foot forward, but they are very late to the party.
The sudden success of the BlackBerry and the iPods also had something to do.
Sony Ericsson was in the right path with their P800-P900-P910 line of smartphones running Symbian OS. Big Screen, behind a 'normal' but removable phone keyboard.
After the iPad success, Sony Ericsson abandoned the P line to produce walkman phones.
After the BlackBerry success, all smartphones were abandoned to make BlackBerry clones.
That's the echo chamber you mention. Thank his Steveness Apple had something else in mind.
Microsoft was busy with Windows Mobile 6.5(1) which after many years of revisions was complicated to use and in dire need of a complete reboot. Motorola was living high off the Razor (which I purchased at launch at $300) creating a million different versions of it until they watered down the brand name.
Apple even teamed up with Motorola to do an iPod phone(2), which I think stands as the poster boy of what was wrong with the industry at the time, the echo chamber I refer to, everyone was so caught up with refining the innovations of the past that they ended up blind sighted by the original iPhone and scrambling to catchup; Many say that Google was finally able to do that with the Jelly Bean release of Android, the much more polished look of the OS combined with Project Butter for an overall very refined experience. In Microsoft's case it's clear Windows Phone 7 wasn't what it need to be necessitating another reboot of the mobile OS, maybe the shared Windows kernel, Direct X, native SDK and product integration Microsoft is promising will be the push it needs.
The funny thing is I think Apple as of late is falling into the same trap the mobile phone industry found itself in before the original iPhone. Most everything out of Apple lately is iterative and not innovative; it's very difficult if not impossible to keep an innovative streak going and not get bogged down on endlessly refining the original innovative product.
From the wiki (1)
"Ballmer also indicated that the company "screwed up with Windows Mobile", he lamented that Windows Mobile 7 was not yet available and that the Windows Mobile team needed to try to recoup losses."
I agree with many of your points, but want to point out that Apple's goal was not to introduce the iPhone and then continue to innovate it, it was to perfect it; which they are very close too. Furthermore, Techies want innovation, general consumers want design and function that works and looks good, period. They don't give a crap that you can touch your phones together and transfer a playlist, or "innovation" as some would call it. My prediction is Apple's next innovation will not be in the phone or music industry and it may not come for a while.