Nokia just recently started to make a competitive phone but even then it got a lot of bad rep from it's flaws at launch, and in turn ended up giving away the first wave of phones for free. You can't survive if you are not making a profit.
Given the fact that they only support Windows Phone OS, it only makes things harder for them. They are targeting a small user base and even then it shouldn't even exist. Microsoft is just dumping money into it just because they can. Maybe things will change when Windows 8 comes out and your phone then become a fully functional computer but hell, we'll have to wait and see on that.