Where MS missed the mark is gaming. I think it's important to have a different experience in terms of applications and UI. However, the overall quality and quantity of Xbox Live games is pretty pathetic. How do they not deliver any AAA first party games on their own platform? Gears of War, Halo, Forza, etc. I know it's easily overlooked but how are third party developers supposed to support a platform that MS has seemed to overlook?
When the Xbox Live Arcade launched - especially with XNA, MS touted it as an easily developable platform and it proved correct. Look at the amount of Indie and XBLA games - many of incredible quality. How have they not made it easy or advantageous for developers to port these over to WP? I am not in the know-how as to the ease or difficulty in porting from XBLA to WP but it should be much easier than it appears to be.