There is more than one strategy active in this sector. Apple, Google, Microsoft - and all the little fish have different needs. The market seems to allow several strategic approaches to deliver success at the same time.
Apple's packaged Hardware+Software (supported by a high margin) with a flourishing Apps Ecosystem; works for them. Apple offer just four iOS devices; but lots of people keep buying them. The High Margin approach has made Apple stinking rich.
Google's Free OS, with key Apps and services, plus a flourishing Apps Ecosystem; works for them.
You can choose any device that runs Android (including Google's Nexus devices). But as long as you stay in the Google environment, they have access to you. That "locked in access approach" has made Google stinking rich.
Microsoft still have Windows and Office, they still make LOTS of money. WP is slowly gaining traction; it has an Apps Ecosystem and that is slowly improving. Microsoft is buying Nokia to insure that good Windows Phones WILL be made. We all know that Surface RT has been a flop, but both RT and Surface Pro were a marketing ploy. The Microsoft approach may be "work in progress" - but it is FAR from finished.
Both Google's little fish and Microsoft's OEMs are still going. Some are doing better than others - but it was ever thus. Of the three BIG players, the Microsoft situation is the more "confused and confusing. But no single player has total dominance or is expiring on the shoreline - - yet.