Thanks to playing their cards right and arrogance and stupidity on part of Nokia they won, but it wasn't always clear it would be like that.
PuTTY has been supported on Nokia phones since 2004: http://s2putty.sourceforge.net/news.html
I didn't use it, but I did have a Python interpreter running on my E65 (with APIs for camera, GPS, calling, etc) before the iPhone 1 was even released.
And they rightly forget them -- they were awful, over-expensive crap. $10 for some BS casual game, $30 for a TODO app etc. And don't get me started on the Java ME crap.
iPhone changed the whole carrier/manufacturer/customer dynamic for the better (this is coming from a diehard BlackBerry user).
That's pretty much the core of what I still use a smartphone for. My iPhone is sitting here next to me playing me music as it has done all day, keeping me in touch with my partner who is interstate, reminding me that I have to put the bins out tonight, and otherwise staying out of my way.
What else did a smartphone need to do that the iPhone couldn't?
That's totally untrue. It destroyed everything of the time -- I know, I had smartphones since 2000, Sony stuff, Nokia stuff etc.
I don't understand why people like to rewrite history. At the behinning the fight wasn't at all decided.
And he's right about price. The iPhone was not cheap, and there is a market for cheap smartphones. I think what they missed is what was happening with Android as that is what stole the market he was aligning Microsoft towards.
Not once did he say it wouldn't work for Apple. He reaffirmed their vision at the time and concluded saying "lets see what happens".
What Microsoft failed to do is innovate on their own products hard enough. And sadly for Microsoft, their consumer brand is just not as cool as Apple and probably never will be.