They made everyone buy new phones for Windows Phone 8, which did not have any user-visible changes (though it did switch the OS to NT).
They took multiple years to add basic functionality like a notification center, and by the time they did, it was too late.
They actually shot themselves in the foot and had extremely poor Office support - behind even the competitor platforms that got a proper set of apps.
They bought Nokia's phone business and then just gave up completely.
What's a shame. I liked the minimalist Zune-like UI - it was perfect for a phone. And it just looked cool.