You have to peel the onion a layer deeper...M$ had a real chance to dominate the handheld computing market with CE but they blew it. The first ass-kicking came at the hands of Palm OS. After wasting both personal money and professional reputation betting that Microsoft was the horse to ride, I finally gave up on them before they rebranded and transformed it in to "Mobile". Microsoft's reputation in the early mobile device market was that of a loser with 3rd rate products and poor support. They had zero reputation in embedded (and still don't). They were all about the desktop, Office, and server, and they really had no chance at mobile.
That is correct Windows CE phones/pda were out in Europe well before the iPhone. When I move back to the US I was very disappointed in not seeing a CE phone on the market.
Microsoft had great products, they just had very poor marketing. I still use a Microsoft 950 phone today, the Camera outperforms todays Iphone. Thinking about buying a backup 950, just in case.