In short, Google was lifted by others to become a success and Microsoft didn't get that same lift, or the same stunning hardware, and its fortunes declined. But first you have to start with something that is truly competitive and the Nokia Lumia 900 may be the ticket.
Lumia 900 vs. iPhone vs. Galaxy Nexus
These are the flagship products from each vendor and none of them are slouches. Each runs the most current OS (with the Google products it is often unclear whether an upgrade will be coming, so it is best to favor the current OS).
One of the initial comparisons is out. On paper, the Nexus, which is a Samsung/Google flagship product, is the clear winner in hardware with two critical exceptions. The security of the OS and battery life lag the other products. The security problem continues to plague Android rendering it unacceptable for many.
Based on the feedback from that EMC event, the Windows 7 and Apple platforms are peers in terms of security, but the Lumia falls between the iPhone and Nexus in battery life with 7 hours. Against the iPhone, it lags on screen pixel density and leads on screen size. Here, the iPhone is showing its age as the market at the high end has been aggressively moving to the 4.5-inch range of the Lumia and Nexus, but the iPhone is still 3.5 inches. Size does matter, particularly on the Web; however, pixel density also matters and here the iPhone dusts the Lumia in particular. But Apple's display is IPS while both Nexus and Lumia are AMOLED (vastly higher contrast and 20 percent better sunlight performance). On processor, the Lumia has the fastest, but it is single core, while the iPhone once again shows its age with the slowest but it is double core. Again, the Nexus stands out as fast and dual core.
One place where the Lumia beats the Nexus is on camera with it more in line with the excellent one in the iPhone. So, from a business-use perspective, until Google starts taking security as seriously as Apple and Microsoft do, its technology lead doesn't matter. This makes the Lumia a better alternative to the iPhone than the top Google product. The Lumia is better than the iPhone in two critical areas, network speed and screen size, and behind in another critical area, battery life. I also think the tradeoff of pixel density (iPad advantage) against outdoor view ability (Lumia and Nexus advantage) to favor business use.
Wrapping Up: Nokia and Microsoft Are Back in the Game
I don't think the Lumia is better in enough places to win many iPhone converts. However, it is clearly close enough to hold on to what remains of Windows Phone users and for those picking between both platforms initially, it is well differentiated. I'll disagree with my friend Dan Lyons that it will kick Apple's butt; however, it is good enough to showcase that a future phone could and, thanks to Android's security issues, should be a better business alterative to the iPhone than even the best of the Android products currently are.
At the end of the day, this is all potential and up until now Microsoft has massively underfunded the demand generation for this device much like it did for the mature Zune products. Nokia is supposed to address that and, if it does, this could be the beginning of a much more powerful competitor from Microsoft, which is much more acceptable to IT than Android. If it doesn't, then this will be another "might have been" like so many attempts since Bill Gates stepped down as I have little doubt that Google, much like Microsoft eventually did, will come around to taking security seriously.
The Nokia Lumia 900 is a player. Time will tell whether Microsoft and Nokia have the drive to eventually make its children into true market leaders.