We can argue all day about whether Nokia was right to jump into bed with Windows Phone/Microsoft, but what might be a more interesting question is if they were right to sign exclusively with Windows Phone/Microsoft.
If they had not done so they could have their current line of WP8 devices on the market, and alongside them they could be testing the waters with an Android device or two. Just let the market decide.
Nokia hardware with a virgin Android installation and a handful of custom Nokia apps sounds like an appealing offering. In fact I would buy such a phone if it were available.
A lot of manufacturers have been installing gunk-ware over Android (e.g. Samsung TouchWiz, HTC Sense, etc) making it slow and laggy, and delaying Android updates by between weeks and sometimes years. Virgin Android (or "the Nexus experience") is actually a real selling point for many Android fans and something Nokia could exploit.
Another area where traditional Android phone manufacturers have suffered is that they simply release too many phones. This has confused consumers, weakened their marketing, and split their efforts too widely. If Nokia released no more than three devices per year (small, medium, and large) they could concentrate all of their efforts (marketing and development) in a might smaller area but get much more bang for their buck.