Of course they’re playing catch up. The OS is less than a year old. Yes, they are behind, but they will catch up, eventually. Will they actually be relevant considering the other players (apple/android) have such a head start? I’m not so sure, but with the Nokia deal, they can probably flood the market with a really nice hardware/software combination, similar to what Apple can provide in terms of ecosystem.

In the first year, the iPhone didn’t even have 3rd party apps, nor did they do cut/paste. You need to take the time to get the basics right, then slowly build on that base. MS has a lot of cash, so they can afford to take it a bit slowly, in order to make sure their product gets better. In fact, they’ve got a history of doing exactly that.