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AT&T: If You Can't Sell Enough Windows Phones, Give 'Em Away

Microsoft (MSFT) has received a fair amount of bad press over the lukewarm reception for smartphones running its Windows Phone 7 operating system. The hardware vendors and carriers can't be happy about the units they expected to sell. But AT&T (T) has a solution: give away a Windows Phone 7 handset for each one that it sells.

Call it an early Black Friday holiday sales special, with the customer required to buy a phone at $199 with a two year service contract. It's listed as a limited time offer, except there's no end date mentioned. It suggests that the pessimism over Microsoft's last chance in mobile may be well placed.

Although the new operating system has won respect, it hasn't shown the ground breaking quality that would be necessary to take the market lead from either Google (GOOG) or Apple (AAPL). And to top things off, there are enough problems to suggest that things simply won't go well for Microsoft:

For AT&T to already relegate the new phones to the two-for-one category, though, is the kiss of death. Carriers don't like giving anything away. Such sales are usually a sign that products aren't taking off fast enough to please carriers, which have often bought into large volume. Microsoft's commitment of half a billion in ad dollars for the new operating system makes the miss even more obvious, as that would have been one big reason for an AT&T to make a heavy commitment.

If putting that kind of money into promotion gets fire sale conditions barely two weeks after the devices were introduced in the U.S., there may be no hope for a brighter future. And that leaves Microsoft facing its decline in client operating systems and more people move to mobile devices for much of their computer needs.

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