The fascinating thing is that Nokia knew. They knew right from the beginning. This "different phones for different niches" was just a desperate marketing spiel to save face.
http://www.hs.fi/kuukausiliite/a1381288411564?jako=8ca7cf121...
This is a letter a finnish journalist sent to Nokia in 2008. He was blown away by the iPhone! The letter was circulated internally and different managers called him to explain Nokias strategy. He meets up with the bosses and the following ensues:
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The manager started to brief me on the backgrounds of Nokia's strategy. The idea was that people are different, and therefore, they need different kinds of telephones.
I became agitated: "The kind of person who wants to use a bad telephone does not exist!", I said.
THIS SPARKED AN argument. I explained in different ways how dreadful my new telephone was, and the manager spoke in its defence.
All of a sudden he went silent. He looked directly in my eyes and said: "This conversation is in confidence, isn't it?"
I assured him that it was.
He continued:
"I agree completely with everything that you wrote in your letter and with what you have said now."
I was astounded.
"I agree completely with you and I want to apologise on behalf of Nokia for producing a bad telephone for you."
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5 Years later (2013) he meets the manager again. He tells a story so disarmingly cute Apple should print it as advertising:
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He told me that when the iPhones came out in the United States in the summer of 2007, the situation was followed at Nokia with keen interest. A large number of iPhones were immediately delivered to Nokia's head offices in Espoo by courier.
The manager took his own iPhone home that same evening. He studied it so enthusiastically that it caught the interest of his four-year-old daughter.
As an experiment, he gave the telephone to his daughter, and she learned to use it immediately.
In the evening as the parents were going to bed, the drowsy four-year-old appeared at their bedroom door with a question:
"Can I take that magic telephone and put it under my pillow tonight?"
It was at that was the moment that the Nokia executive understood that his company was in trouble.