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The problem with the N-Gage was that it was a jack of all trades but master of none. It wasn't as good a handheld console as a Gameboy Advance and it wasn't as good a phone as pretty much any high-end phone. In both handheld console and cell phone terms, it's sales were pretty poor.
However, as a smartphone, it was a big success. To put things in perspective - the Nokia N-Gage sold 2 million units. That probably as many units as all Microsoft Smartphone sales for this year put together! According to Nokia, the N-Gage actually made a profit too, no doubt because it was based on existing components, including the software.
For $100 SIM-free, you got a smartphone, with full web-browser, expandable memory, colour screen, bluetooth, etc. It was actually a pretty good deal, especially since you could play homebrew/freeware on it.
However, it will always be compared to other handheld consoles and therefore a flop.
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