But MS wanted Apple's level of control more than anything - certainly more than they wanted success. They poisoned their loyal userbase with Phone 7 and every good (mobile) thing they had died in that grave.
But the Metro UI on Window Phone 7 and the Zune HD was handsdown the best and smoothest smartphone UI I've used yet. It's a shame it was killed with the Windows 8 blunder.
The Nokia Lumia phones had some amazing hardware for the era too. Head to head with Apple and leagues better than the chintzy Android phones of the era.
Neither Apple nor Google have come close to replicating something as intuitive.
In the face of no cut/copy/paste, no multitasking, no sdcard support and only MS store apps allowed - you could have made do with wallpaper of the Phone7 GUI for all the functionality you got out of it.
Zune on the other hand was absolutely as good as you say. Maybe the mistake was trying to make that perfect Zune OS work on a smartphone.
The incredible part is how on the developer community sessions on YouTube or Github issues, they talk about rewriting as if that wasn't a big development cost.
Naturally the Windows developer community that invested into the Win32 => WinRT evolution, no longer wants to hear about WinUI 3.0/WinAppSDK, unless they have a sunken cost into products that they somehow still want to sell and depend on WinRT related technologies to avoid closing shop.
WinRT was my favourite development stack from all mobile platforms. And XNA/Silverlight before it.
Perhaps they expected they will see so much adoption that the existing ecosystem will be dwarfed. Guess who got dwarfed for good.