Back in 2010 or so Microsoft they had a good deal there with Windows Phone, Windows, Office and their developer tools. They were good times. But due to mismanagement and direction changes they managed to burn their own mobile platform to the ground (rewrote it using NT and told all developers to start again) and all developer interest (visual studio bloat/dropping silverlight/appfabric etc), pretty much destroy their operating system trying to respond to the iPad (Windows 8+) and the forced move to O365. Compared to then windows is a productivity drain now for me. The work factor is lower and the friction is higher.
Apple sort of just incrementally improved their products. Small features, more consistency, better screens, better CPUs, things just working etc etc. They didn't have to do much because Microsoft ruined their product line and are now trying to flog the dead horse again with CoPilot.
Thing is, Microsoft
had to rewrite their mobile platform because that is what Apple had done: they abandoned NewtonOS and Mac OS Classic in favor of Mac OS X, then branched that out to iOS. iOS's kernel, like Windows NT, and unlike Windows CE, is a "proper" OS, enabling things Windows Mobile, BlackberryOS, Symbian, etc. simply couldn't do. Their graphics, networking, etc. layers were simply far more limited than those of the Mac OS X- (NeXT-) derived iOS.
So I don't think Windows Phone 8 being NT-based was the wrong move. But what made this especially grating was: they shipped Windows Phone
7 as CE-based, yet made it incompatible both at the app layer
and at the hardware layer with Windows Mobile 6.
Then they shipped Windows Phone 8 as NT-based, which was easier to migrate at the app layer, but once again provided no upgrade means at the hardware layer. And then they did the same thing
again with Windows 10 Mobile. And
then, finally, that OS had less than two years' worth of shelf life. Truly a sinking ship.
(And that's before we get to their misfire of Silverlight…)
In retrospect, the big mistakes happened long before all of that; as you say, they were content with their success of Windows and Office, and were hubristic to think that Apple wasn't going to compete in mobile. They hadn't evolved Windows Mobile much in years, and here came this small competitor who had a new offering that was basically a decade ahead. And then came Android…
As late as July 2009, they thought they could compete with an evolution of Windows Mobile 6.
That era — Windows Vista requiring a development reboot, Windows Mobile 7 being canceled in favor of Windows Phone 7, Silverlight never becoming a huge success, etc. — is full of interesting lessons in corporate hubris.