The Economist on why Nokia could no longer compete:
The first generations of modern mobile phones were purely devices for conversation and text messages. The money lay in designing desirable handsets, manufacturing them cheaply and distributing them widely. This played to European strengths. The necessary skills overlapped most of all in Finland, which explains why Nokia, a company that grew up producing rubber boots and paper, could become the world leader in handsets.
As microprocessors become more powerful, mobile phones are changing into hand-held computers. As a result, most of their value is now in software and data services. This is where America, in particular Silicon Valley, is hard to beat.
I typically don’t quote that much of any one article, but honestly this is a dead on analysis of what is going on in the mobile market right now. A shift from hardware driven sales (through design and the like) to software driven sales. That is why Apple can sell a rectangular glass slab with a silver band and have people swooning over it — it’s about the software.