They did, Nokia launched their first Symbian smartphone in 2001, the Nokia 7650. iPhone was launched in 2007. The Newton of 1997 is not exactly a phone, so I don't think it counts here, but if it does, so does the Nokia Communicator 9000 of 1996. Either way, Nokia was first to market.

Apple had the advantage of a nicer product, and was building products for the US first, rather than US maybe later. Tech news is mostly (but not completely) based in the US, so Nokia smartphones got little coverage as they were often unavailable or non functional in the US. Different GSM frequencies meant different builds, and CDMA was an even more different build. And Nokia had messed up relations with US carriers at a time when phones selling through carriers was the primary method of reaching customers.