I think the problem wasn't Microsoft entering the market too early so much as never really rethinking their approach to a platform. Their idea for PDAs/phones was a tiny version of desktop windows (compare that to Apple's Newton, with all its flaws). Their idea for tablets was a pen based version of desktop windows.
Microsoft has NEVER really originated a UI paradigm or OS, they just copied/bought/stole stuff from other people, and generally did it badly. (No question they sometimes contribute refinements.)
We're just lucky they didn't try to put a tiny version of DOS on PDAs and a pen driven version of DOS on tablets.