Everything discussed above - and more - factors in to holding Windows Phone back. Windows Phone is suffering a death of a thousand cuts. It starts with the fact that Windows Phone was extremely late to market relative to the competition, allowing Android and iOS to define the current era of touch-based smartphone UIs/OSes long before Windows Phone launched. The iPhone launched in Summer of 2007; The first Android handset came out in Fall 2008. The first Windows Phone 7 devices came out in Fall 2010, over 3 years after the iPhone, 2 years after Android. In the fast moving mobile market, this was an eternity. Heck, WebOS (remember that?) came out in Summer 2009, over 1 year before WP7. Windows Phone even launched roughly six months after Apple released the 1st iPad. When you're that late to a market that already has two popular competitors, you've got a serious uphill battle in the best case.
When it comes to the UI, not only was WP7 different than the dominant mobile OSes at the time, but UI-wise it had nothing to do with it's namesake desktop OS either, making it doubly confusing to consumers. The situation with Windows 8 is different, but potentially even worse. With Windows 8 there's a coherence between the desktop OS and phone, but given the unpopularity of Windows 8, that doesn't do Windows Phone any favors. When showing off my Windows Phones the reactions have ranged from indifference to a "Yuck, it's like Windows 8" type of reaction. Since I hadn't seen this sort of reaction discussed much in the media, I thought maybe it was just unique to my circle of friends and acquaintances. However a few months ago, Josh Pollard on the Entertainment 2.0 podcast related a similar reaction by a friend of his who, when seeing the tiled interface of a Windows Phone for the first time, refused to look at it any further based on her negative opinion of Windows 8 on a laptop. What's even more interesting is that Josh said she had previously told him that although she hated the interface on her laptop, she could see the potential for it on a tablet. (On a related note, I think it's interesting that while MS is talking about Windows 10 coming to the Xbox One, Microsoft never really highlights that it's currently based on Windows 8. As Paul Thurrott has mentioned, if Windows 8 had taken off, Microsoft would be trumpeting the fact that it's also on the Xbox One. As it is, they're doing their best to distance the Xbox from Windows 8. Can't really do that with Windows Phone, though.)