Back in January of 2007, in a CNBC interview, Microsoft CEO Steve Ballmer grossly underestimated the threat Apple's iPhone with the following comments:
"It doesn't appeal to business customers because it doesn't have a keyboard which makes it not a very good e-mail machine."
"Right now we're selling millions and millions and millions of phones a year. Apple is selling zero phones a year... let's see how the competition goes"
"Motorola Q for $99... it'll do music, internet, e-mail, IM"Source: Steve Ballmer, YouTube video, January 19, 2007
In hindsight, we can easily laugh at Ballmer's comments. Adding ActiveSync to the iPhone has made it very appealing to business with Congress testing out the iPhone to replace their army of Blackberries. Apple has surpassed all Windows Mobile sales in Q3 2008. And the Motorola Q has come and gone with little impact to the mobile world except to remind us that Windows Mobile is dated/buggy and Motorola makes cheap phones.
Hopefully this is a wake up call for Microsoft to focus on the complete experience rather than rely on manufacturers like HTC to slap on bandaid solutions like the TouchFlo UI.