The differentiator was the marketing hype.
They stepped up the game by delivering on day zero which made people hang on them. That is still marketing.
Lumia marketing is horrible, but they are producing hype via innovation. Apple don't do that any more. They have nothing to deliver any more.
Their marketing has changed from "new product" to "new incremental improvement" i.e. the hype is dying.
Marketing here is purely spin.
Saying that the iPhone is not leaps and bounds better than anything else in the market at the time is disingenuous - if you used both the N95's browser (with the crummy joystick-controlled mouse) and the iPhone's multitouch browser, you'd know there is no comparison.
I'll go further and say the Nokia phones at the time were much more marketing-driven. They had huge checklists of features _so that marketing could say they have "more features"_ (e.g. irDA), but the core experience was poor (unresponsive and confusing UI, bad input methods) it didn't matter.
Did Nokia make better phones? In one sense, yes - they had longer battery lives, better cameras, they worked much better as phones, for chrissake. But, in the most important way, the iPhone blew everything out of the water - which phone people would prefer to use. I preferred a usable browsing and mapping experience to the jack-of-all-trades and master of none approach of Nokia phones, and apparently, so did the market.
The iPhone is a crappy phone with crappy battery life and has a crappy camera. None of this is desirable nor unique (O2 XDA kind of nailed all of these in 2002).
Apple however made it successful through marketing.
And don't mention usable mapping after the last week or so :)
Sure, Apple's marketing is better than that of their competitors. But good marketing and good products aren't mutually exclusive.
That said, since the original iPhone, the updates have gotten increasingly incremental, and the competitors have closed the gap.
The iPhone was way ahead of Nokia Symbian phones in power of its web browser, display, touch sensitivity etc.
The problem here is that you appear to have no idea what the word "better" means to a consumer, as opposed to a hacker.
And that's why you can't understand Apple's success and write it off to "marketing".
What Jobsy did was more than marketing - but a lot of it was marketing. He drove things in a particular direction, which makes him somewhat of a visionary - not just a marketer.
On the other hand, I agree with the great grand-parent poster. What Apple had was not significantly better, just packaged better. I view that as a visionary rather than marketing.
The hype and popularity exists because Apple has produced very compelling products. The iPod and the iPhone were both leaps and bounds ahead of the competition at their launch. It's also clear that Jobs was the driving force behind their vision.
You say that "even [you]" waited on Apple announcements because "they usually stepped up the game" which translates into the fact that Apple made better/interesting/more innovative products. Note you didn't say "even I waited on Apple news announcements because their marketing was so amazing."
You say that Lumias are treading on their "innovation" territory. Not their marketing territory, their innovation territory.
If it was all marketing, they would still be winning by your argument. Has their marketing dramatically changed in the past few years?
The only rational way to reconcile this is by you saying "oh, by marketing, I mean the whole product package, user interface, software, and hardware design". In which case, you just are simply defining marketing wrong.